Executive Compensation and Competition in the Banking and Financial Sectors

Cuñat, Vicente and Maria Guadalupe
Authors registered in the RePEc Author Service: Vicente Cuñat

No 4425, CEPR Discussion Papers from Centre for Economic Policy Research

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; Product market competition; Performance related pay (search for similar items in EconPapers)
JEL-codes: J31 L10 (search for similar items in EconPapers)
Date: 2004-06
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Executive compensation and competition in the banking and financial sectors (2009)
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 (2007)
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2004)
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