Cross-listing, managerial compensation and corporate governance

• Main Author: Yongli Luo
• Format: Article
• Language: English
• Published: Taylor & Francis Group 2014-12-01
• Series: Cogent Economics & Finance
• Subjects: cross-listing; executive compensation; corporate governance; China
• Online Access: http://dx.doi.org/10.1080/23322039.2014.967361

This study examines the relationship between cross-listing and managerial compensation of Chinese firms that concurrently issued A- and B-shares or A- and H-shares during 2001–2010. The results show that executive compensation is a positive factor to motivate Chinese A-share firms to cross-list as B- or H-shares; it implies that cross-listings could be employed as a way of asset appropriation at the managers’ discretion. The results also confirm that corporate governance is important in determining cross-listings. Under the weak corporate governance institution, Chinese firms were chosen to cross-list based on political considerations rather than on economic merits, serving as a vehicle to signal the quality of state owned enterprises. The results are drawn on agency theory, signalling hypothesis and bonding hypothesis.