CEO overseas experience and researchers’ wages

ABSTRACT

Using data on Chinese listed firms from 2017 to 2022, we examine the effect of CEOs’ overseas experience on researchers’ wages. We find that CEOs’ overseas experience increases researchers’ wages. This finding remains valid after robustness tests and is prominent for state-owned enterprises, large firms, and firms with CEOs who have worked or studied in the U.S. We study the role of CEOs’ overseas experience in firms’ internal labour market and deepen our understanding of researchers’ compensation contracts.

KEYWORDS:

• CEO
• overseas experience
• researchers’ wages
• labour market

JEL CLASSIFICATION:

• G30
• M50
• M52

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Chinese listed firms began to disclose detailed information about researchers’ wages in 2017, and the latest and most detailed financial information of listed firms is in 2022.

² These observations account for approximately 0.03%.

³ This means that CEOs also have overseas experience when they have worked or studied in Hong Kong, Macao, or Taiwan. The definition is suitable because although these regions belong to China, they have different political and economic systems. These regions have developed economic and labour markets as the U.S. In addition, CEOs with overseas experience also include foreigners from developed countries (regions). We obtain a detailed list of developed countries (regions) from the International Money Fund (https://www.imf.org/en/Publications/WEO/web-database/2023/April/groups-and-aggregates).

⁴ CEO duality is a dummy variable that equals 1 when the CEO and chairperson are the same person and 0 otherwise.

⁵ We use the natural logarithm of the maximum value of monthly minimum wages in provinces where a firm’s office address (Minwage).

⁶ Specifically, we use a one-to-one nearest neighbour matching of propensity scores, which is estimated by a logit regression of Oversea on a set of control variables. Appendix A presents the balance test results, which consist of pairwise comparison of covariates on which matching is performed before and after the matching process.

⁷ Following Mobbs et al. (2021), we use the logistic regression model to examine the relationship between CEO overseas experience and the instrumental variable because the dependent variable in the first stage of the two-stage instrumental variable method is a dummy variable.

⁸ The board is used to help small and medium-sized firms to list.

⁹ The variable US is not included in the method because of collinearity.

Additional information

Funding

The work was supported by the Nanjing Normal University [184080H201A38].