Foreign competition and executive compensation in the manufacturing industry: A comparison between Germany and the U.S.

Arbeitspapier

In this study we use import penetration as a proxy for foreign competition in order to empirically analyze (1) the impact of foreign competition on managerial compensation, (2) differences in the impact between Germany and the U.S. and (3) whether the impact of import penetration is driven by implied efficiency effects. We use data from the manufacturing industry covering the period from 1984-2010 for Germany respectively 1992-2011 for the U.S. and apply system GMM in order to solve potential endogeneity problems. It turns out that foreign competition leads to an increase of average per capita executive compensation in both countries. The impact of foreign competition on payperformance sensitivity differs between the U.S. and Germany. A differentiation between imported intermediates (efficient sourcing strategy) and final inputs (competition) reveals that the impact of import penetration is not biased by efficiency effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 18-034

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions ; Empirical Studies of Trade ; Corporate Finance and Governance: General ; Compensation Packages; Payment Methods
• Subject: Foreign Competition ; Outsourcing ; Managerial Incentives ; International Comparison ; System GMM

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dyballa, Katharina ; Kraft, Kornelius
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/182016
• Last update: 10.03.2025, 11:44 AM CET