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Executive compensation and competition in the banking and financial sectors

Vicente Cuñat () and Maria Guadalupe ()

Journal of Banking & Finance, 2009, vol. 33, issue 3, 495-504

Abstract: This paper studies the effect of product market competition on the compensation packages that firms offer to their executives. We use a panel of US executives in the 1990s and exploit two deregulation episodes in the banking and financial sectors as quasi-natural experiments. We provide difference-in-differences estimates of their effect on (1) total pay, (2) estimated fixed pay and performance-pay sensitivities, and (3) the sensitivity of stock option grants. Our results indicate that the deregulations substantially changed the level and structure of compensation: the variable components of pay increased along with performance-pay sensitivities and, at the same time, the fixed component of pay fell. The overall effect on total pay was small.

Keywords: Executive; compensation; Performance-related; pay; Incentives; Product; market; competition; Deregulation (search for similar items in EconPapers)
Date: 2009
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Related works:
Working Paper: Executive compensation and competition in the banking and financial sectors (2007) Downloads
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2007) Downloads
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2004) Downloads
Working Paper: Executive Compensation and Competition in the Banking and Financial Sectors (2004) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:33:y:2009:i:3:p:495-504

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