Are overconfident executives alike? overconfident executives and compensation structure: Evidence from China

We study the effect of executive overconfidence on their compensation structure by employing a sample of listed firms in China, an economy with a relatively collective culture. The empirical findings demonstrate that like those in the U.S., overconfident CEOs in China also tend to have more incentive compensation despite the different culture. Further analysis shows that state ownership weakens the sensitivity of overconfident executives to incentive compensations. In addition, by examining the effect of an exogenous shock, we find that while the 2012 anti-corruption campaign has impacts on the compensation structure of both SOEs and non-SOEs, it further increases the incentive-pay sensitivity gap between overconfident executives of SOEs and non-SOEs.