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Executive compensation and competition in the banking and financial sectors

Cuñat, Vicente ORCID: 0000-0001-7504-2801 and Guadalupe, Maria (2009) Executive compensation and competition in the banking and financial sectors. Journal of Banking and Finance, 33 (3). pp. 495-504. ISSN 0378-4266

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Identification Number: 10.1016/j.jbankfin.2008.09.003

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.

Item Type: Article
Official URL: http://www.elsevier.com/wps/find/journaldescriptio...
Additional Information: © 2008 Elsevier B.V.
Divisions: Finance
Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HG Finance
Date Deposited: 08 Feb 2011 09:55
Last Modified: 13 Sep 2024 22:41
URI: http://eprints.lse.ac.uk/id/eprint/32244

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