Abstract
We examine how executive compensation can be designed to motivate product marketcollusion. We look at the 2013 decision to close several regional offices of the Depart-ment of Justice, which lowered antitrust enforcement for firms located near these closedoffices. We argue that this made collusion more appealing to the shareholders, and findthat these firms increased the sensitivity of executive pay to local rivals’ performance,consistent with rewarding the managers for colluding with them. The affected CEOswere also granted more equity compensation, which provides long-term incentives thatcould foster collusive arrangements.
| Original language | English |
|---|---|
| Publication date | 2022 |
| Number of pages | 75 |
| Publication status | Published - 2022 |
| Event | 32nd Annual Conference on Financial Economic and Accounting. CFEA 2022 - Georgia State University, Atlanta, United States Duration: 4 Nov 2022 → 5 Nov 2022 Conference number: 32 https://robinson.gsu.edu/academic-departments/accountancy/cfea2022/ |
Conference
| Conference | 32nd Annual Conference on Financial Economic and Accounting. CFEA 2022 |
|---|---|
| Number | 32 |
| Location | Georgia State University |
| Country/Territory | United States |
| City | Atlanta |
| Period | 04/11/2022 → 05/11/2022 |
| Internet address |
Keywords
- Product market collusion
- Corporate governance
- Managerial compensation