Title: The moderating effect of environmental uncertainty on executive shareholding and firms' investment decisions

Authors: Richard B. Nyuur; Hao Wu; Yaw A. Debrah

Addresses: Newcastle Business School, Northumbria University, City Campus East 1, Newcastle upon Tyne, NE1-8ST, UK ' Retail Financial Department, Industrial Bank Co. Ltd., No. 399 Weiyang Road, Yangzhou, Jiangsu Province, China ' School of Management, Swansea University, Bay Campus, Fabian Way, Swansea, SA2-8PP, UK

Abstract: This study investigates the relationship between executive shareholding and firm investment decisions (FID) under circumstances of environmental uncertainty (EU). We posit that the implementation of equity incentive plans for executives could influence their decision-making behaviour towards underinvestment or overinvestment. Using data from a sample of 400 listed Chinese firms from 2009-2012, we find that the relationship between executive shareholding (ES) and FID is inverted U-shaped. Further, we find a negative relationship between environmental uncertainty and FID, but no evidence of a moderating effect of environmental uncertainty on the association between executive shareholding and investment decisions. We, therefore, outline the implications of these findings and advance a theory based on these findings.

Keywords: executive shareholding; firm investment decisions; FID; corporate performance; environmental uncertainty; China.

DOI: 10.1504/IJMCS.2020.107677

International Journal of Multinational Corporation Strategy, 2020 Vol.3 No.1, pp.26 - 48

Received: 10 Apr 2019
Accepted: 17 Aug 2019

Published online: 02 Jun 2020 *

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