We study the impact of directors with foreign experience on executive Compensation.
Using a data set from Chinese listed companies, we find out that
executive compensation tends to be higher in companies with directors that
have foreign experience. To evaluate this change in executive compensation,
we further explore the impact of director with oversea background on pay performance
link in these companies, which is an indicator of corporate governance
and compensation management. Result shows that the impact of directors
with foreign experience depends on the equity nature of the company.
References
[1]
Jensen, M.C. and Murphy, K.J. (1990) Performance Pay and Top-Management Incentives. Journal of Political Economy, 98, 225-264.
https://doi.org/10.1086/261677
[2]
Hall Jr., O.P. and Ko, K. (2017) Determinates of Executive Compensation. International Journal of Knowledge-Based Organizations (IJKBO), 4, 53-63.
[3]
Firth, M., Fung, P.M.Y. and Rui, O.M. (2003) Corporate Performance and CEO Compensation in China. Journal of Corporate Finance, 12, 693-714.
https://doi.org/10.1016/j.jcorpfin.2005.03.002
[4]
Adams, R.B., Hermalin, B.E. and Weisbach, M.S. (2010) The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey. Journal of Economic Literature, 48, 58-107. https://doi.org/10.1257/jel.48.1.58
[5]
Lorsch, J. (1989) Pawns or Potentates: The Reality of America’s Boards. Harvard Business School Press, Boston, MA.
[6]
Main, B.G.M., O’Reilly, C.A. and Wade, J. (1995) The CEO, the Board of Directors and Executive Compensation: Economic and Psychological Perspectives. Industrial & Corporate Change, 4, 293-332. https://doi.org/10.1093/icc/4.2.293
[7]
Kato, T. and Long, C. (2006) Executive Compensation, Firm Performance, and Corporate Governance in China: Evidence from Firms Listed in the Shanghai and Shenzhen Stock Exchanges. Electronic Development and Cultural Change, 54, 945-983.
[8]
Da Silva Rodrigues, I.F. (2014) Nationality Diversity on Board of Directors and Its Impact on Firm Performance. Tilburg University, Tilburg.
[9]
Wang, Y. and Liu, D. (2016) Independent Directors with Foreign Experience and Investor Protection. Communication of Finance & Accounting, No. 15, 68-72+129.
[10]
Giannetti, M., Liao, G. and Yu, X. (2014) The Brain Gain of Corporate Boards: Evidence from China. Journal of Finance, 70, 1629-1682.
https://doi.org/10.1111/jofi.12198
[11]
Wang, W. and Hu, C. (2015) The Overseas Background of the Independent Director and Executive Compensation Contract. Journal of Southeast University (PHILOSOPHY AND SOCIAL SCIENCE EDITION), 3, 67-75+147.
[12]
Li, D., Moshirian, F., Nguyen, P. and Tan, L. (2007) Corporate Governance or Globalization: What Determines CEO Compensation in China? Research in International Business & Finance, 21, 32-49. https://doi.org/10.1016/j.ribaf.2005.12.003
[13]
Bebchuk, L.A. and Fried, J.M. (2003) Executive Compensation as an Agency Problem. Journal of Economic Perspectives, American Economic Association, 17, 71-92.
[14]
Fung (2009) Is There Any Stickiness in Executive Pay in Chinese Listed Companies? Economic Research, 3, 110-124.
[15]
Conyon, M.J. (1997) Corporate Governance and Executive Compensation. International Journal of Industrial Organization, 15, 493-509.
https://doi.org/10.1016/S0167-7187(96)01032-6
[16]
John, K. and John, T. (1993) Top-Management Compensation and Capital Structure. Journal of Finance, 48, 949-974.
https://doi.org/10.1111/j.1540-6261.1993.tb04026.x
[17]
Berle, A. and Means, G. (1932) The Modern Corporation and Private Property. Macmillan, New York.
[18]
Conyon, M. and He, L. (2011) Executive Compensation and CEO Equity Incentives in China’s Listed Firms. Journal of Corporate Finance, 4, 1158-1175.
https://doi.org/10.1016/j.jcorpfin.2011.04.006
