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The Ethical Dimension of Management Ownership in China

Author

Listed:
  • Wei Li

    (Beijing International Studies University)

  • Yaping Wang

    (Peking University)

  • Liansheng Wu

    (Peking University)

  • Jason Zezhong Xiao

    (Cardiff University)

Abstract

Management ownership has ethical consequences because it has an interest alignment effect or an entrenchment effect. In this paper, we investigate the ethical consequences of management ownership in China using accounting conservatism as the direct measure of entrenchment and alignment between shareholders and managers. We argue and find that the ethical effect of management ownership differs significantly in firms with different ultimate controlling shareholders. Specifically, management ownership in non-state-owned enterprises (NSOEs) has an alignment effect, while management ownership has less of an alignment effect in state-owned enterprises than in NSOEs. These results show that the ethical consequences of management ownership are moderated by the nature of ultimate controlling ownership.

Suggested Citation

  • Wei Li & Yaping Wang & Liansheng Wu & Jason Zezhong Xiao, 2017. "The Ethical Dimension of Management Ownership in China," Journal of Business Ethics, Springer, vol. 141(2), pages 381-392, March.
    • Handle: RePEc:kap:jbuset:v:141:y:2017:i:2:d:10.1007_s10551-015-2722-1
    DOI: 10.1007/s10551-015-2722-1
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