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Relative Earnings and Firm Performance: Evidence from Publicly-listed Firms in China, 2005-2012
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Relative Earnings and Firm Performance: Evidence from Publicly-listed Firms in China, 2005-2012

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  • Peiwen Bai
  • Wenli Cheng

Abstract

This paper studies the relationship between three measures of relative earnings and firm performance based on data of 664 listed manufacturing companies in China over the period 2005-2012. It finds that (1) capital earnings relative to labor earnings and the overall average wage level relative to a firm’s average wage level had negative effects on firm performance; (2) the earnings of high-level managers relative to ordinary workers had a positive impact on firm performance; and (3) the effects of relative earnings on firm performance differed across regions, industry characteristics, and firm ownership structures, and over different time periods.

Suggested Citation

  • Peiwen Bai & Wenli Cheng, 2014. "Relative Earnings and Firm Performance: Evidence from Publicly-listed Firms in China, 2005-2012," Monash Economics Working Papers 51-14, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2014-51
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    More about this item

    Keywords

    relative income share of capital and labor; relative earnings of management and workers; relative wage; firm performance in China;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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