This study provide an empirical study investigating the relation between executive compensation, ownership structure, and financial firm performance for Chinese publically listed firms. The empirical results reveal that executive compensation in China financial firms has increased remarkably after its privatization reform. Both board characteristics and ownership structure have a strong influence on executive incentive compensations after controlling for standard economic factors. The empirical findings suggest that the board and ownership variables in the compensation equation have significant impact on the effectiveness of banks’ investment strategies and performance. The results have important implications for board members as well as the regulators on the measurement of management compensation and risk control in financial industry.
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