Incentive compensation for bank directors: The impact of deregulation

    Authors

    D. A. Becher; T. L. Campbell;M. B. Frye

    Comments

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    Abbreviated Journal Title

    J. Bus.

    Keywords

    BOARD COMPOSITION; EXECUTIVE-COMPENSATION; CORPORATE PERFORMANCE; GOVERNANCE STRUCTURE; INSURANCE INDUSTRY; OWNERSHIP; PAY; ACQUISITIONS; CEO; CONSEQUENCES; Business

    Abstract

    Although deregulation leads to changes in the duties of boards of directors, little is known about changes in their incentives. U. S. banking deregulation and associated changes during the 1990s lends itself to a natural experiment. These industry shocks forced bank directors to face expanded opportunities, increased competition, and an expanding market for corporate control. While bank directors received significantly less equity-based compensation throughout most of the 1990s, by 1999, their use of such compensation is indistinguishable from a matched sample of industrial firms. Our results suggest firms respond to deregulation by improving internal monitoring through aligning directors' and shareholders' incentives.

    Journal Title

    Journal of Business

    Volume

    78

    Issue/Number

    5

    Publication Date

    1-1-2005

    Document Type

    Article

    Language

    English

    First Page

    1753

    Last Page

    1777

    WOS Identifier

    WOS:000232977700005

    ISSN

    0021-9398

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