This research examines the impact of foreign shareholder on executives’ pay stickiness by analyzing China’s listed companies from 2007 to 2021. The analysis finds that foreign shareholder ownership leads to an increase in executive pay stickiness. This is evident in the increased upward pay sensitivity. The individualistic cultural tendency of foreign shareholders and executives’ power play a crucial role in this mechanism. Additionally, the positive impact of foreign ownership on executive pay stickiness is more significant in the sample where foreign shareholders are the actual controllers and the internal and external monitoring is weak. Furthermore, the hypothesis regarding the positive effect of executive pay stickiness is validated by identifying the increasing role of executive pay stickiness in firm innovation and value.

Using samples of corporate bonds issued by Chinese A-share firms from 2007 to 2019, we examine how the type of local bond underwriting firm, specifically, whether the local underwriter has foreign shareholders or does not have foreign shareholders, affects the number of bond covenants. Our findings suggest that local underwriters with foreign shareholders (UFS) add more covenants to their bonds to protect the interests of bondholders than local underwriters without foreign shareholders (UNFS). Thus, having UFS underwrite bonds in an emerging market generally helps investor protection. Our conclusion remains robust to alternative metrics of bond covenants and foreign shareholders, and after accounting for endogeneity. Additional analyses suggest that the effect of UFS on bond covenants is more salient when: 1) the issuer is opaque, has a dual board chair and CEO, or is a non-state owned firm, 2) the issuer is located in a poor legal environment, in a low marketization area, or a region with poor economic development, or 3) the foreign shareholder of the local underwriter has experience in its home market, is from a country with a better legal environment, or has ample experience in the Chinese underwriting business.