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Executive compensation and product market competition

Cuñat, Vicente and Guadalupe, Maria (2004) Executive compensation and product market competition. CEPDP, 617. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753017199

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Identification Number: 617

Abstract

The aim of this paper is to study the effects of product market competition on the explicit compensation packages that firms offer to their executives. In order to measure the net effect of competition we use two different identification strategies. The first exploits cross sectoral variation in concentration ratios and the panel nature of the dataset. The second uses as a quasi-natural experiment the deregulations that occurred in the banking and financial sectors in the nineties and estimates differences in differences coefficients. Our results show that a higher level of product market competition increases the performance pay sensitivity of executive compensation schemes, and they hold through a number of performance measures such as stock options or bonus. The results are robust to a number of specification checks.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2004 the authors
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Accounting and Finance
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 28 Jul 2008 08:31
Last Modified: 31 Oct 2012 10:14
URI: http://eprints.lse.ac.uk/id/eprint/19985

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