Foreign ownership and corporate excess perks

Lifang Chen (), Minghui Han (), Yong Li (), William L. Megginson () and Hao Zhang ()
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Lifang Chen: Xiamen National Accounting Institute
Minghui Han: South China University of Technology
Yong Li: University of International Business and Economics
William L. Megginson: University of International Business and Economics
Hao Zhang: Guangdong University of Foreign Studies

Journal of International Business Studies, 2022, vol. 53, issue 1, No 7, 72-93

Abstract: Abstract Using manually collected data on foreign owners from 39 international jurisdictions for the 2010–2018 period, we find that foreign ownership significantly reduces corporate excess perquisite consumption in Chinese-listed companies. We take the instrumental variable approach and confirm this causal relationship. Investors from jurisdictions with strong corporate governance and those committed to the principles of responsible investment have greater monitoring effects. Greater cultural distance undermines these effects. The disciplinary role of foreign ownership is stronger in firms with weak governance and low information transparency. Foreign investors reduce corporate excess perks and thereby improve the operational performance. We focus on foreign investors to investigate the role of international owners in China, a host country with relatively weak corporate governance; future research can consider host countries with strong corporate governance. Consequently, we bring space and process to the forefront of the research agenda on perks in the international business literature.

Keywords: corporate perquisite consumption; foreign ownership; international corporate finance (search for similar items in EconPapers)
JEL-codes: G15 G23 G32 N2 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (11)

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DOI: 10.1057/s41267-021-00466-7

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