 Fleeing entrepreneurs: Foreign residency right and corporate risk-takingQingbin Meng, Haitong Li and Kam C. Chan Research in International Business and Finance, 2023, vol. 65, issue C Abstract: We use a unique sample of Chinese firms to investigate the impact of the foreign residency right (FRR) of a firm’s controlling person on corporate risk-taking. Our findings suggest that the controlling person’s FRR is negatively associated with corporate risk-taking, and the effect of FRR on risk-taking is significantly reduced by Operation Fox Hunt (a program for actively pursuing fled criminals) or when the foreign country has an extradition treaty with China. Our results are robust to tests for endogeneity, alternative metrics of FRR, and risk-taking. We also find that severe financial constraints and a decline in R&D activities are the channels through which FRR reduces corporate risk-taking. Additional analyses show that the effect of FRR on corporate risk-taking is more pronounced when (a) controlling persons hold foreign nationality, (b) controlling persons are powerful or older, or (c) the investors of the firm face greater information asymmetry. Keywords: Foreign residency right; Corporate risk-taking; Emerging market; Financial constraints (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000600 DOI: 10.1016/j.ribaf.2023.101934 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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