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Foreign shareholders and executive compensation stickiness: Evidence from China

Author

Listed:
  • Zhao, Qicheng
  • Hu, Changyu
  • Ma, Ruiyun
  • Yin, Yugang
  • Liu, Yahui

Abstract

This research examines the impact of foreign shareholders on executive compensation stickiness by analyzing China's listed companies from 2007 to 2022. The analysis finds that foreign shareholder ownership leads to an increase in executive pay stickiness by increasing upward pay sensitivity. The individualistic cultural imprint and supervision costs play a crucial role in this mechanism. Additionally, the positive impact of foreign ownership on executive compensation stickiness is more significant in the sample where foreign shareholders are the actual controllers and the internal and external monitoring is weak. Furthermore, the hypothesis regarding the positive effect of executive compensation stickiness is validated by identifying the increasing of firm innovation and value.

Suggested Citation

  • Zhao, Qicheng & Hu, Changyu & Ma, Ruiyun & Yin, Yugang & Liu, Yahui, 2024. "Foreign shareholders and executive compensation stickiness: Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011625
    DOI: 10.1016/j.frl.2023.104790
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    More about this item

    Keywords

    Foreign ownership; Executive compensation stickiness; Individualistic cultural imprint; Supervision costs;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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