Footnote:
In: 2015 Financial Markets & Corporate Governance Conference
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 30, 2015 erstellt
Description:
This study examines how firm- and country-level governance mechanisms affect the role of industry competition in influencing managerial incentives. Specifically, we examine how concentrated ownership structures and legal institutions affect the positive association between industry competition and pay-performance sensitivity. By using samples from four East Asian markets (China, Hong Kong, Singapore and Taiwan) for the 2001-2006 periods, we find that: (1) Industry competition leads to strong pay-performance sensitivity for widely-held firms but not for family- or state-controlled firms, suggesting that the governance role of industry competition is weaken when firms are controlled by family or state; (2) in weak (strong) legal environment, the positive association between industry competition and pay-performance sensitivity is less (more) pronounced, indicating that without strong country-level institutions, industry-level governance mechanisms cannot function well. Overall, our results suggest the importance of firm-level and country-level governance in ensuring the effectiveness of industry-level governance mechanisms