{"title":"Product Market Competition and CEO Pay Benchmarking","authors":"Ivan E. Brick, Darius Palia","doi":"10.1142/9789811202391_0045","DOIUrl":null,"url":null,"abstract":"This chapter examines the impact of product market competition on the benchmarking of a CEO’s compensation to their counterparts in peer companies. Using a large sample of US firms, we find a significantly greater effect of CEO pay benchmarking in more competitive industries than in less competitive industries. Using three proxies for managerial talent that have been used by Albuquerque et al. (2013), we find that CEO benchmarking is more pronounced in competitive markets wherein managerial talent is more valuable. This suggests that pay benchmarking and product market competition are complements. The above results are not due to industry homogeneity.","PeriodicalId":188545,"journal":{"name":"Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning","volume":"88 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2020-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1142/9789811202391_0045","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
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Abstract
This chapter examines the impact of product market competition on the benchmarking of a CEO’s compensation to their counterparts in peer companies. Using a large sample of US firms, we find a significantly greater effect of CEO pay benchmarking in more competitive industries than in less competitive industries. Using three proxies for managerial talent that have been used by Albuquerque et al. (2013), we find that CEO benchmarking is more pronounced in competitive markets wherein managerial talent is more valuable. This suggests that pay benchmarking and product market competition are complements. The above results are not due to industry homogeneity.
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