Foreign residency rights and firm internationalization

Using a unique data set of privately owned firms listed on the Chinese A-share market, we examine the relation between controlling persons' foreign residency rights and firm internationalization. We find that controlling persons' foreign residency rights have a positive effect on firm internationalization. This finding is robust after considering endogeneity issues, alternative measures of foreign residency rights, and the impact of financial crisis. Moreover, we find that the positive effect of foreign residency rights on firm internationalization is more pronounced when firms have international business in residency countries/regions, when the cultural/institutional distance between residency countries/regions and China is lower, or when residency countries/regions have better international relations with China. Finally, further analysis shows that firms whose controlling persons have foreign residency rights make better cross-border acquisitions. Overall, our findings shed light on the positive role of controlling persons' foreign residency rights in promoting firm internationalization. As such, our study enriches the research on controlling persons’ foreign residency rights and the international business literature.