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Globalization and executive compensation

Wolfgang Keller and William Olney

Journal of International Economics, 2021, vol. 129, issue C

Abstract: This paper finds that globalization is contributing to the rapid increase in executive compensation. Employing comprehensive data on top executives at major U.S. companies, we show that their compensation is increasing with exports and foreign direct investment, as well as firm size and technology. Exogenous export shocks unrelated to managerial decisions also increase executive compensation, and there is little evidence that this is due to increasing market returns to talent. We do find that export shocks primarily affect discretionary forms of compensation of more powerful executives at firms with poor corporate governance, as one would expect if globalization has enhanced rent-capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and inequality than previously thought.

Keywords: Inequality; Exports; Foreign direct investment; Executive compensation; Market returns; Rent capture (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Globalization and Executive Compensation (2018) Downloads
Working Paper: Globalization and Executive Compensation (2017) Downloads
Working Paper: Globalization and Executive Compensation (2017) Downloads
Working Paper: Globalization and Executive Compensation (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:129:y:2021:i:c:s0022199620301239

DOI: 10.1016/j.jinteco.2020.103408

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