Accounting and Finance Seminars: Darius Palia

26 October 2016, 4.00 PM - 26 October 2016, 5.30 PM

Professor Darius Palia (Rutgers Business School)

G.15, 15-19 Tyndalls Park Road


Title:  Product Market Competition and CEO Pay Benchmarking


This paper 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, De Franco and Verdi (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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