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Executive Compensation and the Split Share Structure Reform in China

Research output: Contribution to journalArticle

  • Wenxuan Hou
  • Edward Lee
  • Konstantinos Stathopoulos
  • Zhenxu Tong

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    Rights statement: © Hou, W., Lee, E., Stathopoulos , K., & Tong, Z. (2013). Executive Compensation and the Split Share Structure Reform in China. The European Journal of Finance.

    Accepted author manuscript, 1.34 MB, PDF document

Original languageEnglish
JournalThe European Journal of Finance
Early online date8 Jul 2013
Publication statusPublished - 2013


The Split Share Structure Reform in China enables state shareholders of listed firms to trade their restricted shares. This renders the wealth of state shareholders more related to share price movements. We predict this reform will create remuneration arrangements that increase the relationship between Chinese firms’ executive pay and stock market performance. We confirm this prediction by showing such effect among state-controlled firms and especially those where dominant shareholders have greater incentives to improve share return performance. Our results indicate this reform strengthens the accountability of executives to external monitoring by stock market and therefore benefit minority shareholders in China.

    Research areas

  • Executive compensation; Split Share Structure Reform; State Ownership; China

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