- Mar 21, 2019
Finance professor Zhichuan (Frank) Li and his colleagues measure what are called industry tournament incentives for CEOs, as measured by the compensation gap between a CEO at one firm and the highest-paid CEO among similar firms. This incentive is a measure of the available “prize” in the group of firms. Especially when there is high CEO mobility, and a higher probability that a firm’s CEO may win this prize, firm performance, firm risk, and the riskiness of the firm’s investments are positively associated with the external industry pay gap.
Jeffrey L Coles, Zhichuan (Frank) Li, Albert Y Wang; Industry Tournament Incentives, The Review of Financial Studies, Volume 31, Issue 4, 1 April 2018, Pages 1418–1459.