Abstract In Chinese market with great implicit incentives, apparently low compensation of top management may still lead to excessive incentive. The paper, based on the special aspects of compensation incentive for top management of private enterprises and with evidences from Chinese private listed companies from 2001 to 2007, discusses the impacts of compensation incentive for top management on corporate performance. Different from most of other former researches, the paper not only clearly shows delayed effect of compensation incentive for top management, but also finds significant marginal diminishing effect and excessive incentive of compensation incentive for top management which results in an inverted U-shaped relationship with a lower left wing and higher right wing between compensation incentive for top management and corporate performance.
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Received: 09 October 2009
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Corresponding Authors:
TANG Yue-Jun
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