Rank Volatility of Executive Compensation and Firm Performance: Evidence from Chinese Listed Companies in Manufacturing Industry

Chang-Zheng ZHANG, Qian GUO


The paper investigates the effect of the rank volatility of executive compensation on firm performance by selecting the panel data consisting of 1545 firm-years in Chinese listed manufacturing companies during 2008-2012 as the sample. Empirical analysis based on multiple regression analysis based on OLS by applying SPSS19.0 makes a new finding, i.e, there is a negative relationship between the rank volatility of executive compensation and firm performance, which would still hold with the change of measure methods of the research variables. The better practical choice for the boards to set executive compensation is to keep the stable rank order of the executives’ compensation level within the top management teams, and simultaneously to enlarge executive compensation to a moderate degree.


Rank volatility, Executive compensation, Firm performance, Listed companies.


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