See systemicbusiness.org/digests/sabi2002/sabi2002.html

Abstract:

Agency theory argues that companies need to structure their executive compensation so as to attract, retain, motivate, and reward executives. It is implict in agency theory that executive should be rewarded for his performance and that company size should not be a significant determinant of compensation. Empirical evidence in many countries has concluded, however, that size is a major determinant of executive remuneration and the pay-for-performance link is very weak. Most empirical research has adopted a limited theoretical perspective that draws upon one discipline rather than building upon a broad base of disciplines. We argue that this research has generally been limited because it ignores other criteria that can be used to determine executive pay. Our analysis leads to a general framework for exploring the impact of behavioral, economic, and strategic constructs and the role of industry on executive compersation. This study examines the determinants of executives' compensation in China Listed companies by using recent available data. In this paper, we use SEM (structural equation model) to explore the relationship beteween executive compensation and other independent variables indentified in the genernal framework. SEM is used to capture the relationship between unobservable (latent) variables like board control and their observable counterparts (indicator varibles) like duality and executive stock ownership. This study extends our understanding of executive pay in several ways. Most studies have been concerned with the pay of North American executives and UK directors. This study looks at pay in China, a contry with a rather different form of corporate governance than that found in the US, the UK and other "Anglo -Saxon" counties. Finally, our work is based on multidisciplinary, with insights from agency theory complemented by insights form huma n capital theory, strategic management, behavioral theory, institutional thory and so on.

daviding
ezOP
Posts: 34
(7/28/02 9:00:07 am)
Reply Re: ZHENG & TAO 2002-041 The Determinants of Executive C

Since we only have the abstract, and not the full paper, it's difficult to make a full assessment, but I'll try.

Key insights I got from the paper:
Question: Is China moving towards corporate governance systems more like those in the United States? (For better, or for worse)?

How might I apply these concepts:
Recent failures in agency designs have resulted in scandals in the United States (e.g. Enron, Andersen Consulting). I would like to learn if these failures are also endemic in the Chinese context.

Additional ideas I might suggest to the author.
If we had the paper, we could make better comments ....