Executive compensation and competitive pressure in the product market: How does firm entry shape managerial incentives?
Abstract
Motivated by empirical evidence, we develop an incentive contracting model under oligopolistic competition to study how incumbent firms adjust managerial incentives following deregulation policies that enhance competition. We show that firms elicit higher managerial effort by offering stronger incentives as an optimal response to entry, as long as incumbent firms act as production leaders. Our model draws a link between an industry-specific...
Paper Details
Title
Executive compensation and competitive pressure in the product market: How does firm entry shape managerial incentives?
Published Date
Jul 1, 2020
Journal
Volume
106
Pages
60 - 77
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Notes
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