Does firm heterogeneity lead to differences in relative executive compensation?

Ana Albuquerque*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Cost heterogeneity is an important source of performance disparity among firms. This heterogeneity conditions the strategic decisions that firms make in the product market and can lead to heterogeneity in the design of managerial compensation contracts. I investigate the effect of cost heterogeneity in a strategic product market environment where firms compete à la Cournot. The paper offers new predictions on how executive compensation contracts that account for relative performance must be adjusted for cost differences.
Original languageEnglish
Pages (from-to)80-85
Number of pages6
JournalFinance Research Letters
Volume7
Issue number2
DOIs
Publication statusPublished - Jun 2010
Externally publishedYes

Keywords

  • Cost heterogeneity
  • Firm heterogeneity
  • Managerial compensation
  • Relative performance evaluation
  • Strategic decisions

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