Doubts about conventional corporate governance solutions for China : indications from executive remuneration in mainland Chinese companies

Executive remuneration is an important issue in corporate governance. Well-designed executive remuneration packages are expected to reduce agency costs and align the interests of the company executives with those of the company shareholders. This article explores the relationship between directors’ remuneration and non-executive directors’ and directors’ shareholding in the PRC, which has more state-controlled companies than in larger capitalised markets. Using a total sample size of 357 company-year observations in the years 2007–2009, from the Shanghai Stock Exchange of the PRC, this article found that the directors’ remuneration is higher when there are more non-executive directors on the board and when the directors’ shareholding is larger.