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Venture Capital and Executive Incentives in China

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posted on 2024-11-13, 16:30 authored by Jerry Cao, Qigui Liu, Gary Tian
This paper examines the effect that venture capital (VC) has on the pay-performancerelationship in listed Chinese firms. We find that VC has a significantly positive effect onCEO compensation and the pay-performance relationship, such effect particularly stronger infirms needing more managerial efforts and discretions (higher growth opportunity or higherlevels of capital expenditure). In addition, we show that VC-backed firms with moremanagerial discretions are more likely to use stock options. The evidence suggests thatventure capital investors use more sensitive compensation contract for top executives inChinese when the need for managerial discretion is greater. Such compensation schemes byVCs enhance firm performance subsequently.

History

Citation

Cao, J., Liu, Q. & Tian, G. G. (2011). Venture Capital and Executive Incentives in China. 2011 China International Conference in Finance (pp. 1-32). Wuhan, China: CCFN.

Pagination

1-32

Language

English

RIS ID

38280

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