Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110656
Authors: 
Schymik, Jan Simon
Year of Publication: 
2015
Series/Report no.: 
Munich Discussion Paper 2015-9
Abstract: 
Do international trade and technological change influence how firms create incentives for human capital? I present a model that incorporates agency problems into a framework with firm heterogeneity and human capital. My model indicates that trade liberalizations and skill-biased technological change alter the way how the largest firms in an economy incentivize their managers. Increases in managerial reservation wages lead to a reduction in corporate governance investments and a rise in performance compensation since monitoring managers becomes less efficient. Using data on CEO compensation and entrenchment opportunities in public industrial firms in the U.S., I document strong empirical regularities in support of the model predictions. Firms allow for more managerial entrenchment and offer larger CEO compensation when their industries become more open to trade or when production becomes more I.T. intensive.
Subjects: 
international trade and firm organization
agency problems in international trade
endogenous managerial entrenchment
corporate governance and CEO compensation
JEL: 
F1
F16
G34
J33
L22
O33
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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