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<p>How can firms’ corporate governance control excessive CEO pay? This question has remained a central concern from the shareholder perspective. While prior research has provided valuable insights, it has largely downplayed how different institutional contexts—e.g., developed, individualistic contexts versus developing, collectivistic contexts—may influence how governance mechanisms rein in excessive CEO pay. Taking the US and China as representatives of distinct institutional development, we develop a multi-level theoretical framework grounded in an institution-based shareholder perspective. We theorize how institutionally situated corporate governance mechanisms at CEO, board, and ownership levels may affect CEO-board dynamics, and consequently influence excessive CEO pay. Our empirical investigations of the comparative institutional settings of the US and China further show noteworthy disparities in the influences on excessive CEO pay by CEO duality, newly appointed CEOs, board independent directors, board female directors, and institutional ownership. These findings highlight distinct institution-based shareholder logics embedded in contexts with different institutional development.</p>

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Are all ravens black? How does corporate governance in US and Chinese firms rein in excessive CEO pay?

  • 期刊论文

  • 发表日期：

    2025年9月29日

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  • Rui Jiang,
  • Zhiang J. Lin

摘要

How can firms’ corporate governance control excessive CEO pay? This question has remained a central concern from the shareholder perspective. While prior research has provided valuable insights, it has largely downplayed how different institutional contexts—e.g., developed, individualistic contexts versus developing, collectivistic contexts—may influence how governance mechanisms rein in excessive CEO pay. Taking the US and China as representatives of distinct institutional development, we develop a multi-level theoretical framework grounded in an institution-based shareholder perspective. We theorize how institutionally situated corporate governance mechanisms at CEO, board, and ownership levels may affect CEO-board dynamics, and consequently influence excessive CEO pay. Our empirical investigations of the comparative institutional settings of the US and China further show noteworthy disparities in the influences on excessive CEO pay by CEO duality, newly appointed CEOs, board independent directors, board female directors, and institutional ownership. These findings highlight distinct institution-based shareholder logics embedded in contexts with different institutional development.