Does foreign direct investment promote business performance? -- From the perspective of executive compensation incentive and promotion incentive

Abstract

Based on the data of Chinese listed companies from 2015-2020, the impact of foreign direct investment on the business performance of Chinese listed companies is explored from the perspective of executive compensation incentives and promotion incentives. The study finds that FDI has a catalytic effect on the business performance of firms. With regard to the mechanism of action, FDI promotes the improvement of business performance by enhancing executive incentives, and the findings of this paper have practical implications for guiding foreign investment to play the role of corporate governance and improve business performance.