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| A Governance Role of Venture Capital: Perspective from Executive Compensation in ChiNext Listed Firms |
| WANG Xiujun2,LI Yao3,LONG Yu3 |
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Abstract This paper explores how VC affects the level and the structure of executive compensation, and its pay performance sensitivity. Using sample firms listed on ChiNext, our results show that: VC-backed firms have higher level of total executive compensation as well as stock-based compensation； The performance sensitivity of executive compensation of VC-backed firms is lower than that of non-VC-backed firms, implying a substitution effect of VC monitoring； VC-backed firms have higher level of stock-based compensation (stock options and restricted stocks) compared with non-VC-backed firms, which implies an enhancement effect of VC on stock incentives； Under the separation of controlling rights and ownership rights of the controlling shareholders, VC will tend to align the interests of managers and shareholders through stock incentives. This paper sheds light on the uncovered mechanism of VC supervision on its invested firms, and its change under different ownership structures.
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Received: 15 March 2016
Published: 15 October 2016
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Corresponding Authors:
LI Yao
E-mail: liyao@mail.shufe.edu.cn
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2016, Vol. 
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