Whether CEO are Paid Large Compensation Packages? —— Empirical Evidence from Listed Companies in China

Abstract

Using data from Chinese A-share listed companies, this paper empirically finds that, on average, CEO compensation is also increasing in China, while the pay gap between CEOs and ordinary employees is also widening. We find that CEO compensation exceeds the expected pay level or reasonable pay level, which means it is difficult to say that CEOs’ excess pay is 100% reasonable. We also find that an increase in CEO compensation is beneficial to firms' financial performance and R&D innovation, which suggests that the compensation contracts of listed firms are still highly applicable to a certain extent, and that the theory of optimal compensation contracts is still useful in mitigating agency conflicts between shareholders and executives.