These unique data allow us to explore the executive compensation decision
mechanisms in the available business groups. The reasons are as follows. First, listed subsidiaries, as the
main members of XiZu JiTuan, are required to disclose detailed information about their executive compensation
and corporate governance, thus solving the problems of data sources and data reliability. Second, the previous
literature on corporate governance rarely controls for the influence of the characteristics of the ultimate
shareholder (e.g., their preferences) on corporate governance. In XiZu JiTuan, we can reduce this problem,
because differently listed subsidiaries are ultimately controlled by the same shareholder. Third, by analyzing
the ultimate shareholder’s treatment of the different listed subsidiaries and the relationship between the ultimate
shareholder and listed subsidiaries, such as their position and the ownership structure, we can systematically
investigate the motives for and economic consequences of resource allocation inside business groups.