Are managers paid for market power?
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- dc.contributor.author Bao, Renjie
- dc.contributor.author de Loecker, Jan
- dc.contributor.author Eeckhout, Jan
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:46Z
- dc.date.available 2024-11-14T10:09:46Z
- dc.date.issued 2022-04-01
- dc.date.modified 2024-11-14T10:07:09Z
- dc.description.abstract To answer the question whether managers are paid for market power, we propose a theory of executive compensation in an economy where firms have market power, and the market for managers is competitive. We identify two distinct channels that contribute to manager pay in the model: market power and firm size. Both increase the profitability of the firm, which makes managers more valuable as it increases their marginal product. Using data on executive compensation from Compustat, we quantitatively analyze how market power affects Manager Pay and how it changes over time. We attribute on average 45.8% of Manager Pay to market power, from 38.0% in 1994 to 48.8% in 2019. Over this period, market power accounts for 57.8% of growth. We also find there is a lot of heterogeneity within the distribution of managers. For the top managers, 80.3% of their pay in 2019 is due to market power. Top managers are hired disproportionately by firms with market power, and they get rewarded for it, increasingly so.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1834
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68604
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1834
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword market power
- dc.subject.keyword manager pay
- dc.subject.keyword executive compensation
- dc.subject.keyword markups
- dc.subject.keyword reallocation
- dc.subject.keyword superstars
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Are managers paid for market power?
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper