CEO Salary, Personal Characteristics, and Firm Performance in Chinese-Listed Firms: A Cross-Sectional Econometric Modeling Approach

Authors: 
Ming-Lu Wu
DOI Number: 
http://doi.org/10.31039/jomeino.2021.5.3.2
Abstract: 
This study examines the relationships among CEO salary, CEO personal characteristics (such as age, education, and gender), and firm performance. Based on the special phenomenon that female CEOs are much fewer than male CEOs in Chinese-listed firms, the current research aims to discover whether gender is a significant factor affecting firm performance and CEO salary. Cross-sectional econometric models are estimated using data from about 2,600 Chinese-listed firms in 2018 in this study. According to the findings, CEO gender is not significant enough to affect firm performance while female CEOs, although capable of playing the same roles as male CEOs, receive a lower level of salary than male CEOs on average, which leads to certain degree of gender discrimination in the CEO position in China’s listed firms. The findings of this study also have implications for further studies relating to CEO pay, financial performance, and gender discrimination.
Keywords: 
CEO salary, personal characteristics, firm performance, gender effect, listed firms, econometric models.
Full Text: 
File download
References: 

Bebchuk, L. A. & Fried, J. M. (2003). Executive compensation as an agency problem. Journal of Economic Perspectives, 17(3), 71-92. https://doi.org/10.1257/089533003769204362
Chang, Y. Y., Dasgupta, S., & Hilary, G. (2010). CEO ability, pay, and firm performance. Management Science, 56(10), 1633-1652. https://doi.org/10.1287/mnsc.1100.1205
D’Ewart, B. H. (2015). The Effect of CEO gender, age, and salary on firm value. CMC Senior Theses, Paper 1059. http://scholarship.claremont.edu/cmc_theses/1059
Dezsö, C. L. & Ross, D. G. (2012). Does female representation in top management improve firm performance? A panel data investigation. Strategic Management Journal, 33(9), 1072-1089. https://doi.org/10.1002/smj.1955
Ding, T. (2014). Effects of female executives on the performance of public companies in China: based on the perspective of educational and cultural industry. China Development, 14(4), 19-25. https://doi.org/10.15885/j.cnki.cn11-4683/z.2014.04.025
Du, X. Q. & Feng, W. T. (2012). Female managers, institutional environment and corporate charitable donation: Evidence from Chinese capital market. Economic Management Journal, 34(11), 53-63. https://en.cnki.com.cn/Article_en/CJFDTotal-JJGU201211009.htm
Edmans, A., Gabaix, X., & Jenter, D. (2017). Executive compensation: A survey of theory and evidence. The handbook of the economics of corporate governance, 1, 383-539. https://doi.org/10.1016/bs.hecg.2017.11.010
Elsaid, E. & Ursel, N. D. (2011). CEO succession, gender and risk taking. Gender in Management, 26(7), 499-512. https://doi.org/10.1108/17542411111175478
Gabaix, X., Landier, A., & Sauvagnat, J. (2014). CEO pay and firm size: an update after the crisis. The Economic Journal, 124(574), F40-F59. https://doi.org/10.1111/ecoj.12084
Hart, P. & J. Mellors (1970). Management youth and company growth: A correlation? Management Decision, 4(1), 50-43. https://doi.org/10.1108/eb000925
Hoang, T. T., Nguyen, C. V., & Tran, H.V.T. (2019). Are female CEOs more risk averse than male counterparts? Evidence from Vietnam. Economic Analysis and Policy, 63, 57-74. https://doi.org/10.1016/j.eap.2019.05.001
Hoi, C. K. S., Wu, Q., & Zhang, H. (2019). Does social capital mitigate agency problems? Evidence from chief executive officer (CEO) compensation. Journal of Financial Economics, 133(2), 498-519. https://doi.org/10.1016/j.jfineco.2019.02.009
Hu, Z. Y. (2015). Female CEO, social trust and financial constraints. Economic Management Journal, 36(8), 88-98. https://doi.org/10.19616/j.cnki.bmj.2015.08.011
Ibrahim, N. A. & Angelidis, J. P. (1994). Effect of board members’ gender on corporate social responsiveness orientation. Journal of Applied Business Research, 10(1), 35-40. https://doi.org/10.19030/jabr.v10i1.5961
Jalbert, T., Furumo, K., & Jalbert, M. (2010). Does educational background affect CEO compensation and firm performance?. Journal of Applied Business Research, 27(1), 15-40. https://ssrn.com/abstract=1752563
Jalbert, T., Jalbert, M., & Furumo, K. (2013). The relationship between CEO gender, financial performance and financial management. Journal of Business and Economics Research, 11(1), 25-33. https://ssrn.com/abstract=2218859
Kagango, S. (2016). The impact of CEO compensation on firm performance: The gender perspective. Available at SSRN 2957899. http://dx.doi.org/10.2139/ssrn.2957899
Khan, W. A. & Vieito, J. P. (2013). CEO gender and firm performance. Journal of Economics & Business, 67(C), 55-66. https://doi.org/10.1016/j.jeconbus.2013.01.003
Lam, K. C. K., Mcguinness, P. B., & Vieito, J. P. (2013). CEO gender, executive compensation and firm performance in Chinese‐listed enterprises. Pacific Basin Finance Journal, 21(1), 1136-1159. https://doi.org/10.1016/j.pacfin.2012.08.006
Li, B., Guo, J. E., & Kun, S. (2017). Do firms with female CEOs have lower corporate risk-taking? Analysis based on CEO gender. Forecasting, 36(3), 21-27. https://doi.org/10.11847/fj.36.3.21
Li, Y., Hou, S. H., & Wu, H. L. (2016). Effects of female executives of cultural creative listed companies on firm performance. Finance & Economics, 2016(10), 91-99. https://en.cnki.com.cn/Article_en/CJFDTotal-CJKX201610009.htm
Libby, P. A., Libby, R., Phillips, F., & Whitecotton, S. (2009). Principles of financial accounting (1st ed.). McGraw/Irwin.
Libby, P. A., Libby, R., Phillips, F., Whitecotton, S., & Cory, S. N. (2010). Principles of accounting, Issues in Accounting Education, 25(2), 347-348. https://doi.org/10.2308/iace.2010.25.2.347
Lilling, M. S. (2006). The link between CEO compensation and firm performance: does simultaneity matter?. Atlantic Economic Journal, 34(1), 101-114. https://doi.org/10.1007/s11293-006-6132-8
Liu, X., Wright, M., & Filatotchev, I. (2015). Learning, firm age and performance: an investigation of returnee entrepreneurs in Chinese high-tech industries. International Small Business Journal, 33(5), 467-487. https://doi.org/10.1177/0266242613508147
Matolcsy, Z. & Wright, A. (2014). CEO compensation structure and firm performance. Accounting & Finance, 51(3), 745-763. https://doi.org/10.1111/j.1467-629X.2010.00363.x
Mcknight, P. & Tomkins, C. (2004). The implications of firm and individual characteristics on CEO pay. European Management Journal, 22(1), 27-40. https://doi.org/10.1016/j.emj.2003.11.013
Nulla, Y. (2013). Ownership structure and CEO compensation in North America: a combined study approach of NYSE and TSX/S&P index companies. International Journal of Scientific and Engineering Research, 4(9), 1-11. https://ssrn.com/abstract=2385105
Obermann, J. & Velte, P. (2018). Determinants and consequences of executive compensation-related shareholder activism and say-on-pay votes: A literature review and research agenda. Journal of Accounting Literature, 40, 116-151. https://doi.org/10.1016/j.acclit.2018.02.001
O’Reilly, C. A., Main, B. G., & Crystal, G. S. (1988). CEO compensation as tournament and social comparison: a tale of two theories. Administrative Science Quarterly, 33(2), 257-274. https://doi.org/10.2307/2393058
Olsen, R. A. & Cox, C. M. (2001). The influence of gender on the perception and response, to investment risk: the case of professional investors. Journal of Psychology & Financial Markets, 2(1), 29-36. https://doi.org/10.1207/S15327760JPFM0201_3
Ozkan, N. (2011). CEO compensation and firm performance: an empirical investigation of UK panel data. European Financial Management, 17(2), 260-285. https://doi.org/10.1111/j.1468-036X.2009.00511.x
Perryman, A. A., Fernando, G. D., & Tripathy, A. (2016). Do gender differences persist? An examination of gender diversity on firm performance, risk, and executive compensation. Journal of Business Research, 69(2), 579-586. https://doi.org/10.1016/j.jbusres.2015.05.013
Sigler, K. J. (2011). CEO compensation and company performance. Business & Economics Journal, 11, 1-8. http://img2.timg.co.il/forums/1_168498694.docx
Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2,500 Danish firms. International Journal of Productivity and Performance Management, 55(7), 569-593. https://doi.org/10.1108/17410400610702160
Swinney, J. L., Runyan, R. C., & Huddleston, P. (2006). Differences in reported firm performance by gender: Does industry matter?. Journal of Developmental Entrepreneurship, 11(02), 99-115. https://doi.org/10.1142/S1084946706000350
Tan, Y. & Floros, C. (2012). Bank profitability and inflation: the case of China. Journal of Economic Studies, 39(6), 675-696. https://doi.org/10.1108/01443581211274610
Vallascas, F. & Hagendorff, J. (2013). The risk sensitivity of capital requirements: Evidence from an international sample of large banks. Review of Finance, 17(6), 1947-1988. https://doi.org/10.1093/rof/rfs042
Martin, A. D., Nishikawa, T., & Williams, M. A. (2009). CEO gender: Effects on valuation and risk. Quarterly Journal of Finance and Accounting, 48(3), 23-40. https://www.jstor.org/stable/23075251
Wang, P. (2014). CEO Age and firm performance post acquisitions (Unpublished thesis). The John Molson School of Business, Concordia University, Canada.
Wu, M. L. (2020), Examining the internal determinants of profitability of commercial banks in China: A panel data modeling based empirical study. International Journal of Managerial Studies and Research, 8(3), 1-12. http://dx.doi.org/10.20431/2349-0349.0803001
Ye, K., Zhang, R., & Rezaee, Z. (2010). Does top executive gender diversity affect earnings quality? A large sample analysis of Chinese listed firms. Advances in Accounting, 26(1), 47-54. https://doi.org/10.1016/j.adiac.2010.02.008
Xiong, J. (2016). Chairman characteristics and earnings management: Evidence from Chinese listed companies. Open Journal of Accounting, 5(4), 82-94. https://doi.org/10.4236/ojacct.2016.54008
Zhu, W. L. & Deng, L. (2017). Can female executives promote corporate social responsibility? Evidence form listed firms in China. China Economic Studies, 2017(4), 119-135. https://doi.org/10.19365/j.issn1000-4181.2017.04.11

Page: 
14-30.
Issue: 
Volume 5, Number 3, September-December, 2021
Content Status: 
Published