Corporate governance, product market competition and managerial incentives: Evidence from four Pacific Basin countries

H.-C.A. Ko; Y.J. Tong; F.F. Zhang; G. Zheng

doi:10.1016/j.pacfin.2016.10.009

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Corporate governance, product market competition and managerial incentives: Evidence from four Pacific Basin countries

Journal article

Open access

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Corporate governance, product market competition and managerial incentives: Evidence from four Pacific Basin countries

H.-C.A. Ko, Y.J. Tong, F.F. Zhang and G. Zheng

Pacific-Basin Finance Journal, Vol.40, pp.491-502

2016

DOI: https://doi.org/10.1016/j.pacfin.2016.10.009

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Abstract

This paper examines how firm-level governance mechanisms affect the role of competition in influencing managerial incentives. Specifically, we examine how concentrated ownership structures affect the positive association between competition and pay-performance sensitivity. Using samples from four Pacific Basin markets, namely, China, Hong Kong, Singapore, and Taiwan, from 2001 to 2012, we found that competition leads to strong pay-performance sensitivity for widely-held firms, but not for family- or state-controlled firms. This result suggests that the governance role of industry competition is weakened when firms are controlled by family or the state. Our study deepens our understanding on how product market competition shapes managerial incentives and offers insights to policy makers who are interested in enhancing the effectiveness of industry-level corporate governance in shaping managerial incentives.

Details

Title: Corporate governance, product market competition and managerial incentives: Evidence from four Pacific Basin countries
Authors/Creators: H.-C.A. Ko (Author/Creator) - Hong Kong Polytechnic University
Y.J. Tong (Author/Creator) - The University of Western Australia
F.F. Zhang (Author/Creator) - Murdoch University
G. Zheng (Author/Creator) - Sun Yat-sen University
Publication Details: Pacific-Basin Finance Journal, Vol.40, pp.491-502
Publisher: Elsevier B.V.
Identifiers: 991005545277507891
Murdoch Affiliation: School of Business and Governance
Language: English
Resource Type: Journal article

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Collaboration types: Domestic collaboration; International collaboration
Citation topics: 6 Social Sciences; 6.10 Economics; 6.10.63 Corporate Governance
Web Of Science research areas: Business, Finance
ESI research areas: Economics & Business