Executive compensation and competition in the banking and financial sectors

Cuñat, Vicente ORCID: 0000-0001-7504-2801 and Guadalupe, Maria (2007) Executive compensation and competition in the banking and financial sectors. Financial Markets Group Discussion Papers (598). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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Abstract

This paper studies the effect of deregulation and increased product market competition on the compensation packages that firms offer to their executives. We use a panel of US executives in the nineties and exploit the 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) on 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, performance-pay sensitivities grew and, at the same time, the fixed component of pay fell. The overall effect on total pay was small.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://www.fmg.ac.uk/
Additional Information:	© 2007 The Authors
Divisions:	Financial Markets Group Economics
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HG Finance H Social Sciences > HB Economic Theory
JEL classification:	M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues) J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
Date Deposited:	16 Jul 2009 14:57
Last Modified:	13 Sep 2024 20:04
URI:	http://eprints.lse.ac.uk/id/eprint/24497

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