Firms with short-termism: Evidence from expatriate controlling shareholders

Xue Tan, Lin Yu and Hung-Gay Fung

Pacific-Basin Finance Journal, 2022, vol. 73, issue C

Abstract: We use controlling shareholders' emigration data in Chinese non-state-owned enterprises (non-SOEs) listed on stock exchanges in China to investigate the effect of changes in their residency status on firm behavior. Environmental concerns, including low-quality education, medical services, and adverse business conditions for non-SOEs, are important drivers of emigration. These firms engage in short-term investments by holding cash, real estate, and financial assets, targeting short-term earnings growth, and reducing long-term investments, such as corporate social responsibility activities and innovation through R&D and patents. The negative effect of emigration by a controlling shareholder on corporate innovation is weaker for firms with good internal and external corporate governance. Our research highlights the importance of emigration by controlling shareholders in long-term corporate development and offers policy implications for policymakers and investors in emerging markets.

Keywords: Corporate governance; Corporate innovation and R&D; Expatriate controlling shareholder (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000658

DOI: 10.1016/j.pacfin.2022.101770

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