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Manipulation Effect of Managerial Discretion on Managerial Compensation

Evidence from Listed Firms in China



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Manipulation Effect of Managerial Discretion on Managerial Compensation by Zhang Changzheng
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Recently, scholars and practitioners have focused on the inverse relationship between managerial payment and corporate performance, which shows how the principle-agent theory cannot adequately explain the decision mechanism of managerial payment. Based on the Managerial Power Approach, the book brings managerial discretion into the investigation on managerial pay. The book makes contributions such as: it constructs measurement index system of managerial discretion based on public reports. The classical ERIC questionnaire measures managerial discretion directly from CEO's by 63 items, while the book divides managerial discretion into resource co-operation power, structure-position power and expertise-reputation power, and then measures them by public report. The two methods have the similar results, and this method has the advantage of being low cost, and easily carried out. It confirms that managerial discretion can manipulate the managerial pay level by the regression analysis of managerial discretion and managerial pay level. It also confirms that the pay level goes beyond the reasonable level too much with the accretion of managerial discretion, which shows that the manipulation effect on pay level does exist. then the book describes the manipulation effect quantitatively. By curve estimation of monitoring intensity effect on manipulation effect, it also gives other relationship curves between them, which shows that the manipulation effect decreases significantly with the accretion of managerial discretion. The book constructs pay performance sensitivity model based managerial discretion. Based on Saltuk Model, the book brings managerial discretion and proves that managerial discretion and pay-performance sensitivity are negatively associated. Then the book confirms that pay performance sensitivity will decrease with an increase of managerial discretion by regressional analysis.

Author Biography

Zhang Changzheng, Chinese Han Population, Male, born in 1978, a PhD in Management Science and Engineering Graduated from School of Management, Xian Jiaotong University, China. Vice professor specialised in the fields of human resource management and corporate governance, in School of Economics & Management, Xian University of Technology, China. Till the year of 2015, he has published an academic monograph, six academic chapters in Nova Science Publishers, and more than sixty research articles in Chinese and international journals, among which about thirty articles are written and published in English. About twenty research articles have been indexed by EI or CPCI. He has undertaken more than ten research projects from each level of government of China, and he is undertaking the research project of National Social Science Foundation of China under the Grant "15BGL109" and the Scientific Research Foundation of Ministry of Education of the PRC in Humanities and Social Sciences under Grant 14YJA630089.
Release date Australia
May 5th, 2011
Country of Publication
United States
tables & graphs
Nova Science Publishers Inc
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