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The impact of market competition on CEO salary in the US energy sector1

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  • Michaelides, Panayotis G.
  • Tsionas, Efthymios G.
  • Konstantakis, Konstantinos N.
  • Xidonas, Panos

Abstract

In this work, we examine the impact of market competition on CEOs' salaries by analyzing a sample of allS&P American firms in the energy sector, in the 1992–2015 time-span, and measuring market competition by means of the so-called Herfindhal-Hirschman-Index. We divide industries into three sub-groups based on small, medium and high market concentration and try to expand our research by exploring the impact of the recent financial crisis. The paper investigates how CEOs' salaries are affected by firm-level determinants, e.g. firm size, returns on assets, returns on equity, capital expenditure, market concentration, Tobin's Q etc, as well as by the individual characteristics of each CEO, e.g. CEOs age, gender. Based on our findings, the market concentration index in the US energy sector has a negative and statistically significant impact on CEO salary for all firms that operate in either a highly monopolistic or a purely competitive environment. The results of this empirical work are robust after examining for different alternative high order fixed effects specifications.

Suggested Citation

  • Michaelides, Panayotis G. & Tsionas, Efthymios G. & Konstantakis, Konstantinos N. & Xidonas, Panos, 2019. "The impact of market competition on CEO salary in the US energy sector1," Energy Policy, Elsevier, vol. 132(C), pages 32-37.
    • Handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:32-37
    DOI: 10.1016/j.enpol.2019.05.017
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    Cited by:

    1. Halkos, George, 2020. "Examining the level of competition in the energy sector," MPRA Paper 98343, University Library of Munich, Germany.
    2. Yu-Ling Hsiao, Cody & Wei, Xinyang & Sheng, Ni & Shao, Chengwu, 2021. "A joint test of policy contagion with application to the solar sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    3. Riaqa Mubeen & Dongping Han & Jaffar Abbas & Iftikhar Hussain, 2020. "The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    4. Abbas, Jaffar & Balsalobre-Lorente, Daniel & Amjid, Muhammad Asif & Al-Sulaiti, Khalid & Al-Sulaiti, Ibrahim & Aldereai, Osama, 2024. "Financial innovation and digitalization promote business growth: The interplay of green technology innovation, product market competition and firm performance," Innovation and Green Development, Elsevier, vol. 3(1).

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    More about this item

    Keywords

    Energy sector; USA; Competition; CEO; Panel data;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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