Executive compensation, strategic competition, and relative performance evaluation: Theory and evidence

• 成果类型: Article
• 署名作者: Aggarwal, RK; Samwick, AA
• 署名单位: Dartmouth College; Dartmouth College; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00180
• 发表日期: 1999
• 页码: 1999-2043
• 关键词: product-market competition; managerial incentives; empirical-analysis; capital structure; BEHAVIOR; pay; management; oligopoly; industry; VALUES

摘要

We examine compensation contracts for managers in imperfectly competitive product markets. We show that strategic interactions among firms can explain the lack of relative performance-based incentives in which compensation decreases with rival firm performance. The need to soften product market competition generates an optimal compensation contract that places a positive weight on both own and rival performance. Firms in more competitive industries place greater weight on rival firm performance relative to own firm performance. We find empirical evidence of a positive sensitivity of compensation to rival firm performance that is increasing in the degree of competition in the industry.