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

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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)

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

Suggested Citation

  • Martina Musteen & Deepak K Datta & Pol Herrmann, 2009. "Ownership structure and CEO compensation: Implications for the choice of foreign market entry modes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(2), pages 321-338, February.
    • Handle: RePEc:pal:jintbs:v:40:y:2009:i:2:p:321-338
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