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| Author: | Merchant, K.A. (et al.) |
| Title: | Performance measurement and incentive compensation: An empirical analysis and comparison of Chinese and Western firms' practices |
| Journal: | European Accounting Review
2011 : VOL. 20:4, p. 639-667 |
| Index terms: | performance measurement management incentives compensation companies Asia China Netherlands USA |
| Freeterms: | Western firms |
| Language: | eng |
| Abstract: | This paper reports on the findings of a study aimed at providing a replication and extension in China of research with the focus on incentive compensation practices of automobile retailers in the Netherlands and the U.S. Detailed, rich data-sets from all three countries are analyzed in together and in comparison. It is shown that Chinese firms are much more likely to provide incentive compensation than are the Dutch ones, and they are even somewhat more likely to provide them than are U.S. companies. Yet, Chinese bonus plans are more likely to be subjective, rather than based on a formula. In the situations with incentive payments being based on pre-set formulas, the Chinese companies' systems are more like those used in the Netherlands than in the USA, with bonuses based on non-financial performance measures and with more complex performance-reward functions. Like managers in the U.S. firms, but unlike Dutch managers, Chinese managers receiving some form of incentive compensation are more satisfied with their pay. |
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