دانلود رایگان مقاله جهانی سازی و تکامل حاکمیت شرکتی

Abstract

How does globalization affect the balance of power between managers and firm owners? This paper studies the effect of economic integration on governance practices within firms. I propose a theory of endogenous corporate governance investments in industry equilibrium with monopolistic competition. Firms can use investments into better corporate governance as a cheap substitute to performance compensation to mitigate agency problems. International integration alters the demand for managers in the economy such that firms may reduce their corporate governance investments and offer higher performance payments. This globalization-induced deterioration of corporate governance in the economy diminishes the welfare gains from globalization. Using data on governance practices in U.S. manufacturing corporations, I provide empirical evidence that conforms to the model predictions. Firms in industries that experienced substantial trade liberalization between 1990 and 2006 have changed their governance practices allowing for more managerial slack and offered higher equity payments to their CEOs. These effects are particularly large in relatively dynamic industries that are characterized by large exit rates.

4 Conclusion

In this paper, I argue that globalization can be an important factor when it comes to explain the governance choices of firms. I present a theoretical framework that analyzes how corporate governance is influenced by changes in market size. The model predicts that globalization toughens the competition for managerial talent such that firms allow for more managerial slack and create incentives with executive performance pay packages. Using data on governance provisions in a sample of large U.S. manufacturing firms and exploiting variation in tariffs, I find support for this prediction in the data. Trade liberalization in the 1990s has contributed to lower governance standards in manufacturing firms and larger values of CEO option grants. These developments suggest that welfare gains from globalization might be diminished as firms endogenously allowed for more managerial slack when faced by larger foreign demand.