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Are stronger executive incentives associated with cross-listing? Evidence from China

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  • Chi, Wei
  • Zhang, Haiyan
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Abstract

This study examines whether firms incorporated in mainland China benefit from cross-listing in Hong Kong, China. The Hong Kong Stock Market has more stringent rules regarding corporate governance and a better system of investor protection than the mainland market. Hong Kong companies generally provide strong incentives to executives via equity-based compensation. Have cross-listed companies learned from Hong Kong firms about adopting these strong executive incentives? The evidence from this study suggests that changes in top executive compensation are more sensitive to sales growth in cross-listed firms than they are in mainland firms without cross-listing. However, compared to Hong Kong firms, cross-listed firms are less sensitive to stock returns. Further, this study shows that it is necessary to differentiate between state-owned companies and private companies, as cross-listing may have a greater impact on executive incentives in state-owned companies than it does in private companies.

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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 21 (2010)
Issue (Month): 1 (March)
Pages: 150-160

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Handle: RePEc:eee:chieco:v:21:y:2010:i:1:p:150-160

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Web page: http://www.elsevier.com/locate/chieco

Related research

Keywords: Cross-listing Executive compensation Corporate governance;

References

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Citations

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Cited by:
  1. Tina He & Wilson Li & Gordon Tang, 2012. "Dividends Behavior in State- Versus Family-Controlled Firms: Evidence from Hong Kong," Journal of Business Ethics, Springer, vol. 110(1), pages 97-112, September.
  2. Lam, Kevin C.K. & McGuinness, Paul B. & Vieito, João Paulo, 2013. "CEO gender, executive compensation and firm performance in Chinese‐listed enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 21(1), pages 1136-1159.

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