 Pulling together by paying together: The effect of product market competition on TMT incentive dispersionAnutchanat Jaroenjitrkam, George Mihaylov, Yu, Chia‐Feng (Jeffrey) and Ralf Zurbruegg Journal of Business Research, 2023, vol. 165, issue C Abstract: We examine whether firms that face increased competition are more likely to seek uniformity in the incentive payments made to top management teams (TMTs). Motivated by social comparison theory, we conjecture that variation in executive incentive payments will reduce as a strategic response to encourage TMT cooperation. We test this hypothesis by examining how TMT incentive dispersion changes following exogenous product market competition shocks from reduced tariff cuts. Matched difference-in-differences regressions on a large sample of manufacturing firms between 1992 and 2019 support our prediction. Firms experiencing large tariff cuts are associated with both lower total- and equity-incentive dispersion. This effect is stronger for firms with more powerful CEOs, suggesting that CEOs are a key channel for implementing the strategic use of TMT incentives in firms facing external competition. Keywords: TMT compensation; Incentive dispersion; CEO-TMT pay gap; Competition; Social comparison theory (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:165:y:2023:i:c:s0148296323004034 DOI: 10.1016/j.jbusres.2023.114045 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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