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This paper examines executive compensation in the subsidiaries of business groups in China. Analyzing a sample of China business groups (the so-called “XiZu JiTuan” in Chinese) from 2003 to 2012, we find convincing evidence of the use of Relative Performance Evaluation (RPE) in the executive...
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group managers less, suggesting that such a power structure acts as a governance tool to mitigate the astronomical salaries … of Chinese managers. The results are robust to alternative metrics of decentralized power structure and executive … information environment reinforces this negative relationship. However, managers respond by increasing the probability of leaving …
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