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Title: Corporate governance, product market competition and managerial incentives : evidence from four Pacific basin countries
Authors: Ko, HCA
Tong, YJ
Zhang, FF
Zheng, G
Keywords: Managerial incentives
Ownership structure
Product market competition
Issue Date: 2016
Publisher: North-Holland
Source: Pacific basin finance journal, 2016, v. 40, p. 491-502 How to cite?
Journal: Pacific basin finance journal 
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.
ISSN: 0927-538X
DOI: 10.1016/j.pacfin.2016.10.009
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