Chi, Wei and Zhang, Haiyan (2008): Is Cross-listing Associated with Stronger Executive Incentives? Evidence from China.
Download (99Kb) | Preview
This study examines whether firms incorporated in mainland China benefit from cross-listing in Hong Kong, China. The Hong Kong Stock Market has more stringent governance rules and a better investor protection than the mainland market. Hong Kong companies generally provide strong incentives to executives via equity-based compensation. Have cross-listed companies learned from Hong Kong local firms in adopting strong executive incentives? The evidence from this study suggests that top executive compensation of cross-listed firms is more sensitive to sales growth than mainland firms without cross-listing. However, compared to that of Hong Kong firms, executive pay of cross-listed firms are less sensitive to stock returns. Further study shows that it is necessary to differentiate state and non-state companies among the cross-listed firms, as they exhibit different patterns of executive incentives.
|Item Type:||MPRA Paper|
|Original Title:||Is Cross-listing Associated with Stronger Executive Incentives? Evidence from China|
|Keywords:||Cross-listing;Executive Compensation;Corporate Governance|
|Subjects:||J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages; Payment Methods
M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects
|Depositing User:||Wei Chi|
|Date Deposited:||21. Nov 2008 04:47|
|Last Modified:||14. Feb 2013 19:38|
Aivazian, V. A., Y. Ge, J. P. Qiu, 2005. Corporate governance and manager turnover:An unusual social experiment. Journal of Banking & Finance 29, 1459-1481.
Allen, F., Jun Qian and Meijun Qian, 2005. Law, finance, and economic growth in China. Journal of Financial Economics 77, 57-116.
Bao, B.H., L. Chow, 1999. The usefulness of earnings and book value for equity valuation in emerging capital markets: Evidence from listed companies in the People’s Republic of China. Journal of International Financial Management and Accounting 10, 85-104.
Bauer, R., D. Wojcik and G. L. Clark, 2005. Corporate governance and cross-listing: Evidence from European companies. SSRN, Working Paper.
CLSA (Credit Lyonnais Securities Asia), 2002. CG Watch. Corporate governance in emerging markets.
Coffee, J., 1999. The future as history: The prospects for global convergence in corporate governance and its implications, Northwestern University Law Review 93, 641-708.
DeFond, Mark L., T.J. Wong, Shuhua Li, 2000, The impact of improved auditor independence on audit market concentration in China, Journal of Accounting and Economics 28, 269-305.
Doidge, Craig, 2004, U.S. Cross-listings and the private benefits of control: Evidence from dual-class firms. Journal of Financial Economics 72, 519-553.
Doidge, Craig, G. Karolyi, and R. Stulz, 2004a, Why are foreign firms listed in the U.S. worth more? Journal of Financial Economics 71, 205-238.
Firth, M., Fung, P. and Rui, O. M. 2006a. Corporate performance and CEO compensation in China. Journal of Corporate Finance 12, 693-714.
Firth, M., Fung, P. and Rui, O. M. 2006b. Firm performance, governance structure, and top management turnover in a transitional economy. Journal of Management Studies 43, 1289-1330.
Hail, L. and C. Leuz, 2006. International difference in the cost of equity capital: Do legal institutions and securities regulation matter? SSRN, Working Paper.
Ho, S. M., 2003. Corporate governance in Hong Kong: Key problems and prospects, Chinese University of Hong Kong, SSRN working paper.
Jian, Ming, TJ Wong, 2004. Earnings management and tunneling through related party transactions: Evidence from Chinese corporate groups. Chinese University of HK, working paper.
Jiang, Guohua, Charles M.C. Lee, and Heng Yue, 2005. Tunneling in China: The surprisingly pervasive use of corporate loans to extract funds from Chinese listed companies. Beijing University and Cornell University, working paper.
Kaplan, Steven N. 1994. Top Executive Rewards and Firm Performance: A Comparison of Japan and the U.S. Journal of Political Economy, 102 (3), 510-546.
Kato, Takao and Long, Cheryl, 2006. Executive compensation, firm performance, and corporate governance in China: Evidence from firms listed in the Shanghai and Shenzhen Stock Exchanges. Economic Development and Cultural Change 54, 945-983.
Ke, B., O. Rui and W. Yu, 2008. The effect of cross listing on the sensitivity of managerial compensation to firm performance. SSRN working paper.
Lang, M., J. Smith Raedy, and W. Wilson, 2006. Earnings management and cross listing: Are reconciled earnings comparable to U.S. earnings? Journal of Accounting and Economics 42, 255-283.
Lang, M., K. Lins, and D. Miller, 2003. ADRs, analysts, and accuracy: Does cross listing in theUnited States improve a firm’s information environment and increase market value? Journal of Accounting Research 41, 317-345.
Licht, A., 2001. The mother of all path dependencies: Toward a cross-cultural theory of corporate governance systems. Delaware Journal of Corporate Law 26, 147-205.
Licht, A., 2003. Cross-listing and corporate governance: bonding or avoiding? Chicago Journal of International Law 4, 141-163.
Mengistae, Taye, Xu, Linxin Collin, 2004. Agcncy theory and executive compensation:the case of Chinese state-owned enterprises. Journal of Labor Economics 22, 615-637.
Reese, W. and M. Weisbach, 2002. Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings. Journal of Financial Economics 66, 65-104.
Siegel, J., 2005. Can foreign firms bond themselves effectively by renting U.S. securities laws? Journal of Financial Economics 75, 319–359.
Tenev, S., C.L. Zhang and L. Brefort, 2002. Corporate governance and enterprise reform in China. Washington: The World Bank and the International Finance Corporation.
Wang, Qian, T. J. Wong, Lijun Xia, 2005. State ownership, institutional environment and auditor choice: evidence from China. Chinese University of HK working paper.
World Bank, 2002. Corporate governance: A framework for implementation. World Bank paper available at http://www.worldbank.org
Available Versions of this Item
- Is Cross-listing Associated with Stronger Executive Incentives? Evidence from China. (deposited 21. Nov 2008 04:47) [Currently Displayed]