Does controlling persons’ foreign residency rights influence executive compensation?

Miaowei Peng () and Xue Tan ()
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Miaowei Peng: Guangdong University of Finance and Economics
Xue Tan: Hunan Normal University

Review of Managerial Science, 2023, vol. 17, issue 7, No 7, 2375-2416

Abstract: Abstract This study is interested in the effect of controlling persons’ foreign residency rights for executive compensation. Based on a manually collected dataset of Chinese private listed firms from 2004 to 2018, we document that executives in firms with controlling persons with foreign residency rights receive higher excess compensation. These findings provide suggestive evidence consistent with the hypothesis that controlling persons with foreign residency rights design executive remuneration to obtain executives’ cooperation to take advantage of the lower probability of getting caught and punished for self-dealing behaviour. Consistent with this view, we find that the association between foreign residency rights and executive excess compensation is moderated by extradition agreements between destination countries/regions and China, executive ownership, and corporate governance mechanisms.

Keywords: Controlling persons; Foreign residency rights; Executive excess compensation; Corporate governance (search for similar items in EconPapers)
JEL-codes: G30 G32 J31 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11846-022-00583-z

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