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Executive compensation of immigrant-founder firms in the USA

Executive compensation of immigrant-founder firms in the USA The purpose of this paper is to examine CEO compensation in immigrant-founder firms vs CEO compensation in non-immigrant-founder firms.Design/methodology/approachUnivariate and multi-variate tests are implemented. CEO compensation is designed as a function of the origin of a firm’s founder (immigrant or native), executive characteristics and firm characteristics with firm and year fixed effect regressions. CEO compensation is measured with cash pay, equity-based pay and total compensation.FindingsCEOs of immigrant-founder firms receive higher equity-based compensation and higher total pay than CEOs of non-immigrant-founder firms and the levels of their equity-based and total compensation are contingent upon their stock ownership. CEOs in high-growth immigrant-founder firms receive higher stock-based pay than their counterparts in non-immigrant-founder firms. Immigrant-founder family firms compensate their CEOs with higher equity-based pay than immigrant-founder non-family firms.Practical implicationsThe paper provides some explanations on the success of immigrant-founder firms. CEO compensation designs in immigrant-founder firms can be adopted in other firms.Social implicationsThe paper provides some rationale for immigration legislation to encourage the talented to come to the USA and start their business in the USA.Originality/valueThis paper is the first to study executive compensation practice in immigrant-founder firms. The findings provide some practical and policy implications on immigration reform. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Managerial Finance Emerald Publishing

Executive compensation of immigrant-founder firms in the USA

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1743-9132
DOI
10.1108/ijmf-09-2017-0197
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine CEO compensation in immigrant-founder firms vs CEO compensation in non-immigrant-founder firms.Design/methodology/approachUnivariate and multi-variate tests are implemented. CEO compensation is designed as a function of the origin of a firm’s founder (immigrant or native), executive characteristics and firm characteristics with firm and year fixed effect regressions. CEO compensation is measured with cash pay, equity-based pay and total compensation.FindingsCEOs of immigrant-founder firms receive higher equity-based compensation and higher total pay than CEOs of non-immigrant-founder firms and the levels of their equity-based and total compensation are contingent upon their stock ownership. CEOs in high-growth immigrant-founder firms receive higher stock-based pay than their counterparts in non-immigrant-founder firms. Immigrant-founder family firms compensate their CEOs with higher equity-based pay than immigrant-founder non-family firms.Practical implicationsThe paper provides some explanations on the success of immigrant-founder firms. CEO compensation designs in immigrant-founder firms can be adopted in other firms.Social implicationsThe paper provides some rationale for immigration legislation to encourage the talented to come to the USA and start their business in the USA.Originality/valueThis paper is the first to study executive compensation practice in immigrant-founder firms. The findings provide some practical and policy implications on immigration reform.

Journal

International Journal of Managerial FinanceEmerald Publishing

Published: Jul 31, 2019

Keywords: Corporate governance; Executive compensation; Agency theory; Immigrant-founder firms

References