Ownership structure and CEO compensation: Implications for the choice of foreign market entry modes

Martina Musteen, Deepak K Datta and Pol Herrmann
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Martina Musteen: College of Business Administration, San Diego State University, San Diego, USA
Deepak K Datta: Department of Management, College of Business Administration, University of Texas at Arlington, USA
Pol Herrmann: Management Department, College of Business, Iowa State University, Ames, USA

Journal of International Business Studies, 2009, vol. 40, issue 2, 338 pages

Abstract: Drawing on agency theory, corporate governance, and international business literatures, we develop arguments relating equity ownership structures and CEO compensation mix to a firm's choice of foreign market entry modes. Based on a sample of 432 foreign market entries by 118 non-diversified firms in the US manufacturing sector between 1991 and 1998, our findings indicate that greater equity ownership by institutional shareholders and inside directors is positively associated with a preference for full-control entry modes. In addition, our results suggest that CEOs with a greater proportion of pay tied to firm long-term performance are more inclined to choose full-control entry modes over shared-control modes. Journal of International Business Studies (2009) 40, 321–338; doi:10.1057/jibs.2008.63

Date: 2009
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