CEOs' power and perks: Evidence from Chinese banks

In this paper, we investigate the relation between CEOs' power and their perks in Chinese banks over the period from 1999 to 2011 period. We find that banks with more powerful CEOs, as measured by the CEO as the only insider and the CEO's directorships, provide greater perks. This finding could be explained by social needs and monitoring difficulties but not by entrenchment. Powerful CEOs tend to maintain connections or “guanxi” by building political ties and attending more business entertainment activities. They also have lower pay-performance sensitivity. Only a gender-diverse board provides better monitoring to reduce perks.