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Review of Financial Studies Vol. 36 No. 1 2022

Import Penetration and Executive Compensation

Erik Lie1; Keyang Yang2

1 Tippie College of Business, University of Iowa , USA · 2 Carson College of Business, Washington State University , USA

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.

DOI
10.1093/rfs/hhac020
Volume
36
Issue
1
Pages
281-316
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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