How does product market competition shape incentive contracts?

• 成果类型: Article
• 署名作者: Cuñat, V; Guadalupe, M
• 署名单位: Pompeu Fabra University; Columbia University
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1162/1542476054729437
• 发表日期: 2005
• 页码: 1058-1082
• 关键词: relative performance evaluation; executive-compensation; import competition; pay; INFORMATION; hysteresis; EMPLOYMENT; wages

摘要

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.