Quasi-experimental analysis reveals distinct incentive structures across ownership types in Chinese firms, suggesting persistent compensation designs following capital-oriented reforms.
Purpose Although prior research has examined ownership-incentive relationships, the authors broaden the focus to firm-wide incentive architectures and draw on regulatory focus theory (RFT) as an interpretive lens to understand the underlying patterns in this relationship. Design/methodology/approach The authors first use data from Chinese listed companies and examine whether incentive schemes differ systematically across state-owned and private enterprises. Then, leveraging China’s capital-oriented reform as a quasi-natural experiment, the authors further use a staggered difference-in-differences approach to investigate how incentive schemes evolve following ownership transitions. Findings The findings reveal that firms with different ownership types are associated with distinct incentive patterns, which are consistent with differences implied by RFT. The authors also found that following capital-oriented reform, reformed firms exhibit incentive patterns that remain broadly consistent with their pre-reform structures. Practical implications This study offers actionable insights for multiple stakeholders involved in corporate governance and SOE reform. More broadly, the authors’ findings are relevant for boards, investors and senior managers operating in non-SOE or multinational contexts characterized by hybrid governance arrangements. Originality/value The results illustrate how RFT can motivate predictions about ownership-incentive associations and offer a coherent lens for interpreting both cross-sectional differences and reform dynamics in incentive architecture. The findings speak to ongoing debates about governance reform, internal pay equity and incentive alignment, with implications that are consistent with ownership-linked differences across institutional contexts.
No takes yet. Share an insight, caveat, or question.
Deng et al. (2026) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: