Chi, Wei and Zhang, Haiyan (2008): Are Stronger Executive Incentives Associated with Cross-listing? Evidence from China.
This is the latest version of this item.
Download (121Kb) | 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 rules regarding corporate governance and a better system of 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 firms about adopting these strong executive incentives? The evidence from this study suggests that changes in top executive compensation are more sensitive to sales growth in cross-listed firms than they are in mainland firms without cross-listing. However, compared to Hong Kong firms, cross-listed firms are less sensitive to stock returns. Further, this study shows that it is necessary to differentiate between state-owned companies and private companies, as cross-listing may have a greater impact on executive incentives in state-owned companies than it does in private companies.
|Item Type:||MPRA Paper|
|Original Title:||Are Stronger Executive Incentives Associated with Cross-listing? 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:||12. Dec 2009 07:06|
|Last Modified:||19. Feb 2013 00:06|
Aivazian, V. A., Ge, Y., Qiu, J.P., 2005. Corporate governance and manager turnover: An unusual social experiment. Journal of Banking & Finance 29, 1459-1481.
Allen, F., Qian, J., Qian, M.J., 2005. Law, finance, and economic growth in China. Journal of Financial Economics 77, 57-116.
Bao, B.H., Chow L., 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., Wojcik, D., Clark, G. L., 2005. Corporate governance and cross-listing: Evidence from European companies. Available at SSRN: http://ssrn.com/abstract=593364 or DOI: 10.2139/ssrn.593364
Chi, W., Wang, Y.J., 2009. Ownership, performance and executive turnover in China. Journal of Asian Economics. In Press, doi: DOI: 10.1016/j.asieco.2009.04.009.
CLSA, 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, 641-707.
DeFond, M.L., Wong, T.J., Li, S.H., 1999. The impact of improved auditor independence on audit market concentration in China. Journal of Accounting and Economics 28(3), 269-305.
Doidge, C., 2004. U.S. Cross-listings and the private benefits of control: Evidence from dual-class firms. Journal of Financial Economics 72, 519-553.
Doidge, C., Karolyi, G. Andrew, Stulz, R.M., 2004. Why are foreign firms listed in the U.S. worth more? Journal of Financial Economics 71(2), 205-238.
Firth, M., Fung, P., Rui, O.M., 2006a. Corporate performance and CEO compensation in China. Journal of Corporate Finance 12, 693-714.
Firth, M., Fung, P., 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., Leuz, C., 2006. International difference in the cost of equity capital: Do legal institutions and securities regulation matter? Journal of Accounting Research 44(3), 485-531.
Ho, S. M., 2003. Corporate governance in Hong Kong: key problems and prospects. CUHK Centre for Accounting Disclosure and Corporate Governance Research Paper No. 1. Available at SSRN: http://ssrn.com/abstract=440924 or DOI: 10.2139/ssrn.440924
Jian, M., Wong, T.J., 2003. Earnings management and tunneling through related party transactions: Evidence from Chinese corporate groups. EFA 2003 Annual Conference Paper No. 549. Available at SSRN: http://ssrn.com/abstract=424888 or DOI: 10.2139/ssrn.424888
Jiang, G.H., Lee, Charles M.C., Yue, H., 2005. Tunneling in China: The Surprisingly Pervasive Use of Corporate Loans to Extract Funds from Chinese Listed Companies. Johnson School Research Paper Series No. 31-06. Available at SSRN: http://ssrn.com/abstract=861445
Kaplan, S.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, T., Long, C., 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(4), 945-983.
Ke, B., Rui O., Yu W., 2008. The effect of cross listing on the sensitivity of managerial compensation to firm performance. Working paper.
Lang, M., Raedy J.S., Wilson, W., 2006. Earnings management and cross listing: Are reconciled earnings comparable to U.S. earnings? Journal of Accounting and Economics 42(1), 255-283.
Lang, M., Lins, K.V., Miller, D., 2003. ADRs, analysts, and accuracy: Does cross listing in the United States improve a firm’s information environment and increase market value? Journal of Accounting Research 41(2), 317-345.
Licht, A.N., 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.N., 2003. Cross-listing and corporate governance: bonding or avoiding? Chicago Journal of International Law 4, 141-163.
Mengistae, T., Xu, Linxin C., 2004. Agency theory and executive compensation: the case of Chinese state-owned enterprises. Journal of Labor Economics 22, 615-637.
Reese, W., Weisbach, M., 2002. Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings. Journal of Financial Economics 66(1), 65-104.
Siegel, J., 2005. Can foreign firms bond themselves effectively by renting U.S. securities laws? Journal of Financial Economics 75(2), 319-359.
Tenev, S., Zhang, C.L., Brefort, L., 2002. Corporate governance and enterprise reform in China: building the institutions of modern marketing. Washington, D.C.: World Bank and the International Finance Corporation.
Wang, Q., Wong, T.J., Xia, L.J., 2008. State ownership, the institutional environment, and auditor choice: evidence from China. Journal of Accounting and Economics 46(1), 112-134.
Available Versions of this Item
Is Cross-listing Associated with Stronger Executive Incentives? Evidence from China. (deposited 21. Nov 2008 04:47)
- Are Stronger Executive Incentives Associated with Cross-listing? Evidence from China. (deposited 12. Dec 2009 07:06) [Currently Displayed]