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Import Penetration and Executive Compensation

Author

Listed:
  • Erik Lie
  • Keyang (Daniel) Yang
  • Wei Jiang

Abstract

We first compare several measures of import penetration and find that total imports, tariffs, and exchange rates are endogenous, while imports from China are largely exogenous. Then we examine the effects of Chinese import penetration on executive compensation of U.S. firms. We document that Chinese import penetration reduces executives’ stock grants and wealth-performance sensitivity, suggesting that competition mitigates agency problems and the need for conventional alignment mechanisms.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Erik Lie & Keyang (Daniel) Yang & Wei Jiang, 2023. "Import Penetration and Executive Compensation," The Review of Financial Studies, Society for Financial Studies, vol. 36(1), pages 281-316.
    • Handle: RePEc:oup:rfinst:v:36:y:2023:i:1:p:281-316.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac020
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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • F1 - International Economics - - Trade

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