Executive Incentives, Import Restrictions, and Competition: Empirical Analysis of Antidumping and Countervailing Duty Orders
53 Pages Posted: 15 Nov 2019
Date Written: November 4, 2019
To better understand the political economy of trade policy, I examine executive compensation around the time of changes to import restrictions through antidumping and countervailing duty orders. Trade policy restrictions limit international competition, so I explore the resulting compensation of firm managers. When imports are restricted, firms linked to restrictive orders give their CEOs compensation in cash and equity incentives that is 17 percent higher than when the restrictions are not in place. Furthermore, CEOs’ compensation is $1 million higher than expected, suggesting the additional compensation is not explained by superior firm performance or other characteristics. Overall, the findings suggest that executives benefit amid import restrictions, thereby contributing to research on executive incentives, trade, and public choice.
Keywords: managerial incentives, international trade restrictions, competition, firm governance
JEL Classification: M12, G3, F13, J3, K22
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