Organization and Strategy Seminar（2015-06）

Topic：Director Brokerage and Compensation in China: An Altercentric Inner Circle Perspective

Speaker: Zhu Zhu, Baruch College - City University of New York

Time: Thursday,29 October, 13:30 – 15:00 pm

Location: Room 216, Guanghua Building 2

Abstract:

By examining structural holes and board compensation through an altercentric inner circle perspective, we address the theoretical gaps and assumptions in recent studies on the negative side of brokerage. We argue that the rank of brokers and the sub-group dynamics within the inner circle play a key role in shaping alters’ perception of brokers’ dual agent role as eitherTertius GaudensorTertius Iungens. Our altercentric approach complements the predominately egocentric existing literature by paying attention to the differentiated effect of alters’ perception on the compensation implications of egos’ brokerage. We find that CEO brokers, compared to non-CEO brokers, are less negatively affected by their brokerage role in terms of compensation due to the deferential perception of theiralters. Furthermore, the board inner circle is also dictated by a preference transitivity rule, which determines the degree to which group members perceive brokers as dual agents. Our hypotheses are largely supported in the context of 1,535 Chinese listed firms.

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