Financial regulation in geographically-segmented executive labor markets: Evidence from TARP

Richard A. Cazier

International Review of Financial Analysis, 2014, vol. 35, issue C, 219-229

Abstract: Prior literature finds that the Troubled Asset Relief Program's (TARP) executive pay restrictions imposed significant labor market costs on participating banks. I investigate whether outcomes studied in prior literature vary cross-sectionally with the local labor market conditions surrounding the headquarters of TARP participants. Results suggest that the costs borne by banks and their executives from TARP participation are significantly influenced by the strength of executives' local employment alternatives. My evidence suggests that executive labor markets in the financial services industry are geographically segmented, and that regulatory intervention in pay can impose differential costs on firms depending on their geographic location.

Keywords: Executive compensation; Regulation; Troubled Asset Relief Program; Financial crisis (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:35:y:2014:i:c:p:219-229

DOI: 10.1016/j.irfa.2014.09.006

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