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How does product market competition shape incentive contracts?

Cuñat, Vicente and Guadalupe, Maria (2005) How does product market competition shape incentive contracts? Journal of the European Economic Association, 3 (5). pp. 1058-1082. ISSN 1542-4774

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Identification Number: 10.1162/1542476054729437

Abstract

This paper studies the effect of product market competition on the explicit compensation packages that firms offer to their CEOs, executives and workers. We use a large sample of both traded and nontraded UK firms and exploit a quasi-natural experiment associated to an increase in competition. The sudden appreciation of the pound in 1996 implied different changes in competition for sectors with different degrees of openness. Our difference in differences estimates show that a higher level of product market competition increases the performance pay sensitivity of compensation schemes, in particular for executives.

Item Type: Article
Official URL: http://www.wiley.com/bw/journal.asp?ref=1542-4766&...
Additional Information: © 2005 Wiley-Blackwell
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Finance
Departments > Management
Collections > Economists Online
Research centres and groups > Financial Markets Group (FMG)
Date Deposited: 10 Nov 2011 14:17
Last Modified: 31 Oct 2012 10:13
URI: http://eprints.lse.ac.uk/id/eprint/39413

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