Executive compensation of immigrant-founder firms in the USA

Chialing Hsieh, Vivek Pandey and Hongxia Wang

International Journal of Managerial Finance, 2019, vol. 15, issue 4, 546-563

Abstract: Purpose - The purpose of this paper is to examine CEO compensation in immigrant-founder firms vs CEO compensation in non-immigrant-founder firms. Design/methodology/approach - Univariate and multi-variate tests are implemented. CEO compensation is designed as a function of the origin of a firm’s founder (immigrant or native), executive characteristics and firm characteristics with firm and year fixed effect regressions. CEO compensation is measured with cash pay, equity-based pay and total compensation. Findings - CEOs of immigrant-founder firms receive higher equity-based compensation and higher total pay than CEOs of non-immigrant-founder firms and the levels of their equity-based and total compensation are contingent upon their stock ownership. CEOs in high-growth immigrant-founder firms receive higher stock-based pay than their counterparts in non-immigrant-founder firms. Immigrant-founder family firms compensate their CEOs with higher equity-based pay than immigrant-founder non-family firms. Practical implications - The paper provides some explanations on the success of immigrant-founder firms. CEO compensation designs in immigrant-founder firms can be adopted in other firms. Social implications - The paper provides some rationale for immigration legislation to encourage the talented to come to the USA and start their business in the USA. Originality/value - This paper is the first to study executive compensation practice in immigrant-founder firms. The findings provide some practical and policy implications on immigration reform.

Keywords: Corporate governance; Executive compensation; Agency theory; Immigrant-founder firms (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmfpp:ijmf-09-2017-0197

DOI: 10.1108/IJMF-09-2017-0197

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