A Study Of The Relationship Of CEO Pay, Performance And Luck In Chinese Stock Markets

The contracting view of CEO pay assumes that shareholders use pay to solve anagency problem. Simple models of the contracting view predict that pay should not betied to luck, where luck is defined as observable shocks to performance beyond theCEO’s control. However, civil studies focusing on performance and pay related toluck are rare. Our starting point is the collection of CEO pay of more than eighthundred listed companies of the year2010, using two stage least squares, finding suchconclusions as following: firstly, lucky pay generally exists in listed companies, andthe sensitiveness of luck is higher than of performance; secondly, lucky pay innon-private sector is more pronounced than in private listed companies; the last,equity concentration can reduce lucky pay in national market. Suggestions are putforward according to the above conclusions, improvement of the corporategovernance structure and external system waited to be seek.