Executive Compensation and Competition in the Banking and Financial Sectors

Vicente Cuñat () and Maria Guadalupe ()

No 4425, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper studies the effect of product market competition on the compensation packages that firms offer to their executives and in particular its impact on the sensitivity of pay to performance. To measure the effect of competition we use two different identification strategies on a panel of US executives. We exploit two deregulation episodes in the banking and financial sectors as quasi-natural experiments. We provide difference in differences estimates of the effect of competition on estimated performance-pay sensitivities and on the sensitivity of stock option grants. Our results indicate that a higher level of product market competition increases the performance pay sensitivity of executive compensation schemes.

Keywords: executive compensation; performance related pay; product market competition (search for similar items in EconPapers)
JEL-codes: J31 L10 (search for similar items in EconPapers)
Date: Written
View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP4425.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2007)
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2004)
Journal Article: Executive compensation and competition in the banking and financial sectors (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:4425

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP4425.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().