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Journal of Business Ethics

, Volume 141, Issue 2, pp 381–392 | Cite as

The Ethical Dimension of Management Ownership in China

  • Wei Li
  • Yaping Wang
  • Liansheng WuEmail author
  • Jason Zezhong Xiao
Article

Abstract

Management ownership has ethical consequences because it has an interest alignment effect or an entrenchment effect. In this paper, we investigate the ethical consequences of management ownership in China using accounting conservatism as the direct measure of entrenchment and alignment between shareholders and managers. We argue and find that the ethical effect of management ownership differs significantly in firms with different ultimate controlling shareholders. Specifically, management ownership in non-state-owned enterprises (NSOEs) has an alignment effect, while management ownership has less of an alignment effect in state-owned enterprises than in NSOEs. These results show that the ethical consequences of management ownership are moderated by the nature of ultimate controlling ownership.

Keywords

Accounting conservatism China Corporate ownership Ethical dimension Management ownership 

Notes

Acknowledgments

We appreciate comments and suggestions from three anonymous reviewers. Wei Li, Yaping Wang, and Liansheng Wu acknowledge financial support from the National Social Science Foundation of China (No. 14BGL183) and the National Natural Science Foundation of China (Nos. 71272037 and 71025003).

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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Wei Li
    • 1
  • Yaping Wang
    • 2
  • Liansheng Wu
    • 2
    Email author
  • Jason Zezhong Xiao
    • 3
  1. 1.International School of BusinessBeijing International Studies UniversityBeijingChina
  2. 2.Guanghua School of ManagementPeking UniversityBeijingChina
  3. 3.Cardiff Business SchoolCardiff UniversityCardiffUK

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