| Abstract | Based on a survey of 1,268 Chinese private firms, this paper studies the effects of corporate governance on labor welfare. I construct a governance index using the incidence of sixteen structures that discipline managers. Labor welfare is measured by a number of indicators including hourly wage, pension coverage, insurance, severance benefits and average tenure. Regressions carried out on a rich set of specifications show that firms with a higher level of corporate governance not only have higher profitability but also provide better labor welfare. More findings suggest that, pursuing private benefits, managers tend to cut training expenses and various payments on labors, which hurts firm performance; whereas sound corporate governance reduces managerial discretion, adjusting their decisions on labor welfare in line with the interests of shareholders. |