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Ownership Structure and CEO Compensation: Implications for the Choice of Foreign Market Entry Modes

Martina Musteen, Deepak K. Datta and Pol Herrmann
Journal of International Business Studies
Vol. 40, No. 2 (Feb. - Mar., 2009), pp. 321-338
Stable URL: http://www.jstor.org/stable/25483377
Page Count: 18
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Ownership Structure and CEO Compensation: Implications for the Choice of Foreign Market Entry Modes
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Abstract

Drawing on agency theory, corporate governance, and international business literatures, we develop arguments relating equity ownership structures and CEO compensation mix to a firm's choice of foreign market entry modes. Based on a sample of 432 foreign market entries by 118 non-diversified firms in the US manufacturing sector between 1991 and 1998, our findings indicate that greater equity ownership by institutional shareholders and inside directors is positively associated with a preference for full-control entry modes. In addition, our results suggest that CEOs with a greater proportion of pay tied to firm long-term performance are more inclined to choose full-control entry modes over shared-control modes.

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