Executive Pay, Equity, and Cross-Border Transactions: An Examination of Ownership Decisions

Abstract

We examine the acquisition of equity interests in non-domestic firms over the period from 1998 through 2009. We find an inverse relationship between executive salary and the percentage of equity acquired. However, contrary to previous work in the agency and entry mode space, we find no associations between stock option and common equity holdings and the percentage of equity purchased in international transactions. These findings suggest that the antecedents for entry mode selection (shared-control versus full-control) may differ from the antecedents for ownership decisions once a cross-border transaction has been selected.