Foreign institutional investors and executive compensation incentives: Evidence from China

IF 2.9 3区经济学 Q2 BUSINESS, FINANCE Journal of Multinational Financial Management Pub Date : 2022-12-01 DOI:10.1016/j.mulfin.2022.100758

Xu Cheng , Dongmin Kong , Gaowen Kong

引用次数: 0

Abstract

This study examines the effect of foreign institutional investors (FIIs) on executive compensation incentives. Using the quasi-natural experiment of Shanghai (Shenzhen)–Hong Kong Stock Connect, we show that the presence of FIIs has a positive effect on pay-for-performance sensitivity (PPS) and helps to decrease excessive compensation. We also demonstrate that good corporate governance and high accounting information quality would be two possible underlying channels. Our results are more pronounced for firms with fewer state-owned shareholders and powerful managers. Overall, our results indicate that compared with domestic counterparts, FIIs are more effective at improving firms’ executive compensation incentives.

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外国机构投资者与高管薪酬激励:来自中国的证据

本研究考察了境外机构投资者(fii)对高管薪酬激励的影响。利用沪(深)港通的准自然实验，我们发现外资机构的存在对绩效薪酬敏感性(PPS)有积极影响，并有助于减少过度薪酬。我们还证明了良好的公司治理和高会计信息质量将是两个可能的潜在渠道。我们的研究结果对于国有股东较少、经理人有权势的公司更为明显。总体而言，我们的研究结果表明，与国内同行相比，外资机构在改善公司高管薪酬激励方面更有效。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Multinational Financial Management BUSINESS, FINANCE-

CiteScore

7.30

自引率

4.80%

发文量

审稿时长

30 days

期刊介绍： International trade, financing and investments have grown at an extremely rapid pace in recent years, and the operations of corporations have become increasingly multinationalized. Corporate executives buying and selling goods and services, and making financing and investment decisions across national boundaries, have developed policies and procedures for managing cash flows denominated in foreign currencies. These policies and procedures, and the related managerial actions of executives, change as new relevant information becomes available. The purpose of the Journal of Multinational Financial Management is to publish rigorous, original articles dealing with the management of the multinational enterprise. Theoretical, conceptual, and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • Foreign exchange risk management • International capital budgeting • Forecasting exchange rates • Foreign direct investment • Hedging strategies • Cost of capital • Managing transaction exposure • Political risk assessment • International working capital management • International financial planning • International tax management • International diversification • Transfer pricing strategies • International liability management • International mergers.

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