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Does controlling persons’ foreign residency rights influence executive compensation?

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  • Miaowei Peng

    (Guangdong University of Finance and Economics)

  • Xue Tan

    (Hunan Normal University)

Abstract

This study is interested in the effect of controlling persons’ foreign residency rights for executive compensation. Based on a manually collected dataset of Chinese private listed firms from 2004 to 2018, we document that executives in firms with controlling persons with foreign residency rights receive higher excess compensation. These findings provide suggestive evidence consistent with the hypothesis that controlling persons with foreign residency rights design executive remuneration to obtain executives’ cooperation to take advantage of the lower probability of getting caught and punished for self-dealing behaviour. Consistent with this view, we find that the association between foreign residency rights and executive excess compensation is moderated by extradition agreements between destination countries/regions and China, executive ownership, and corporate governance mechanisms.

Suggested Citation

  • Miaowei Peng & Xue Tan, 2023. "Does controlling persons’ foreign residency rights influence executive compensation?," Review of Managerial Science, Springer, vol. 17(7), pages 2375-2416, October.
    • Handle: RePEc:spr:rvmgts:v:17:y:2023:i:7:d:10.1007_s11846-022-00583-z
    DOI: 10.1007/s11846-022-00583-z
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    More about this item

    Keywords

    Controlling persons; Foreign residency rights; Executive excess compensation; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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