Executive compensation, supervisory board, and China’s governance reform: a legal approach perspective

Executive compensation, supervisory board, and China’s governance reform: a legal approach... China’s corporate governance system implements both American and German style mechanisms, but the supervisory board, a typical feature of German style governance is generally considered dysfunctional. After 2006, the newly amended Chinese Corporate Law significantly enhances the role played by supervisory boards. Our study examines if the new Corporate Law improves supervisory board’s monitoring over executive compensation, which becomes one of the main agency concerns in China’s emerging market, thus providing a quasi-experimental testing of the legal approach of governance (La Porta et al. in J Financ Econ 58:3–27, 2000). We examine the effects of both size and meeting frequency of supervisory boards on executive compensations in Chinese listed companies, by using data before and after the new Corporate Law became effective in 2006. We find that before the new Corporate Law became effective, supervisory boards did not affect executive compensation, although their role after that became significant; both supervisory board size and meeting frequency affect total executive compensation, and supervisory board size also influences pay-performance sensitivity. Furthermore, we find that there exists a non-linear effect of supervisory board meeting frequency on executive pay, and an optimal range exists. Policy implications are discussed. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Executive compensation, supervisory board, and China’s governance reform: a legal approach perspective

Loading next page...
Springer US
Copyright © 2010 by Springer Science+Business Media, LLC
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
Publisher site
See Article on Publisher Site


You’re reading a free preview. Subscribe to read the entire article.

DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches


Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.



billed annually
Start Free Trial

14-day Free Trial