Does executive compensation affect firms’ acquisition decisions? Evidence from China

Jiang, Lin; Kling, Gerhard and Bo, Hong. 2021. Does executive compensation affect firms’ acquisition decisions? Evidence from China. Asia Pacific Business Review, 27(5), pp. 731-748. ISSN 1360-2381 [Article]

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Abstract or Description

Exploiting regulatory changes in China that govern the use of stock options, we investigate whether executive compensation affects acquisition decisions and post-acquisition performance from 2005 to 2014. We find that acquisitions are not driven by stock options. Managerial stock ownership promotes acquisitions at low levels of ownership – but leads to less frequent acquisitions at higher levels, implying a non-linear relationship. Similarly, we also find a non-linear impact of managerial stock ownership on long-term post-acquisition performance. However, neither stock options nor stock ownership determine short-term post-acquisition performance. Finally, state ownership has a significant impact on the compensation-acquisition relationship in that the above relationships only exist in private enterprises.

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Additional Information:

“This is an Accepted Manuscript of an article published by Taylor & Francis in Asia Pacific Business Review on 28 October 2020, available online:”


Acquisition; state-owned enterprises; stock option; stock ownership

Departments, Centres and Research Units:

Institute of Management Studies


7 October 2020Accepted
28 October 2020Published Online

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Date Deposited:

22 Oct 2021 15:59

Last Modified:

28 Apr 2022 01:26

Peer Reviewed:

Yes, this version has been peer-reviewed.


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