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This study investigates the impact of corporate performance and corporate governance on executive remuneration in a Chinese market setting. Using Generalized Method of Moments (GMM) estimation approach for a sample of 860 non-financial firms listed on Chinese Stock Exchanges over the 15 years period of 2004–2018, the study found a positive and significant association between corporate profitability and executive pay. The study further reports that ownership concentration is positively related to executive pay revealing an entrenchment effect i.e., collusion between large shareholders and top management. Consistent with managerial power and agency theory CEO duality exhibits a positive relationship with executive remuneration, while board size and board independence also reveal a positive association with executive pay, indicating board ineffectiveness in reducing managerial entrenchment. Interestingly, non-state-owned enterprises report a negative relationship of board size with executive remuneration which means non-state-owned enterprises with larger board size tend to reduce executive pay because they may have better control and monitoring. Following the managerial power propositions, CEO duality weakens the performance sensitivity of executive pay, but contrary to agency theory the impact of board independence on this sensitivity is in contrast and weakens the relationship of managerial pay and performance, making the independent director's role ambiguous.
Corporate governance is one of most widely researched topics in the different fields of management sciences. Additionally, governance plays equal role in firm performance in all countries especially developing countries become more important like Pakistan which contain equal importance to be studied with in subject to developed countries as to be well known in governance values, moreover there is increased interest to observe impact of corporate governance on different dimensions of firm performance. The objective of this paper is to underlay the corporate governance theories and practices and we have studied and try to analysis the impact of corporate governance structure on firm performance. This is a descriptive type of study in which we analysis different studies as coded all studies as they may have different implications in developed countries but here they may have different results as in developing countries and Pakistan is different among other Asian countries because of number of reasons as discussed in introduction with respect to its governance structure. We also have find interesting results as from other empirical studies recently a part of Pakistan perspective research and having number of important implications with respect of changes need to be made in Pakistan’s governance structure. Findings shows there is impact of corporate governance on firm performance and market performance of firm also been effected with governance style
