Equity-based Compensation of Hong Kong-Listed Firms

Project: Research

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Researcher(s)

Description

Equity-based compensation is one of the key corporate governance mechanisms used by many publicly traded firms to reduce the agency conflicts between management and outside shareholders. The use of equity-based compensation is widespread in U.S. firms and has been on the rise in many other countries. There is a large literature that examines the determinants and economic consequences of equity-based compensation in U.S. firms. However, except for a few sporadic studies in a few limited countries (e.g., Canada, United Kingdom, etc.), our knowledge of equity-based compensation for firms outside the U.S. is limited. This is surprising because the political, economic, and cultural environments often differ significantly across countries and thus the existing knowledge of equity-based compensation from U.S. firms may not apply to other countries. One significant impediment to managerial compensation research outside the U.S. is the lack of data.The objective of this study is to use the detailed mandatory disclosures of equity-based compensation in Hong Kong to examine Hong Kong-listed firms' equity-based compensation. The researchers will first conduct a descriptive analysis on the existing practice of equity-based compensation. Second, the researchers will examine whether equity investors react positively to the announcement of equity-based compensation scheme adoption. Third, the researchers will examine whether the common economic determinants of managerial equity compensation adoption found in U.S. firms can explain Hong Kong-listed firms’ equity compensation adoption decisions. To the extent that the common economic determinants fail to explain Hong Kong-listed firms’ equity compensation adoption decisions, the researchers will also consider other alternative determinants, especially those that are unique to the Hong Kong environment and inconsistent with shareholder value maximization.

Detail(s)

Project number9041397
Grant typeGRF
StatusFinished
Effective start/end date1/01/0910/09/12