Download This PaperImport Penetration and Executive Compensation
Review of Financial Studies, Forthcoming
54 Pages Posted: 30 Jan 2018 Last revised: 6 Apr 2022
Date Written: April 5, 2022
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 US 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.
Keywords: Import penetration, Executive compensation
JEL Classification: F16
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