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Financial regulation in geographically-segmented executive labor markets: Evidence from TARP

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  • Cazier, Richard A.

Abstract

Prior literature finds that the Troubled Asset Relief Program's (TARP) executive pay restrictions imposed significant labor market costs on participating banks. I investigate whether outcomes studied in prior literature vary cross-sectionally with the local labor market conditions surrounding the headquarters of TARP participants. Results suggest that the costs borne by banks and their executives from TARP participation are significantly influenced by the strength of executives' local employment alternatives. My evidence suggests that executive labor markets in the financial services industry are geographically segmented, and that regulatory intervention in pay can impose differential costs on firms depending on their geographic location.

Suggested Citation

  • Cazier, Richard A., 2014. "Financial regulation in geographically-segmented executive labor markets: Evidence from TARP," International Review of Financial Analysis, Elsevier, vol. 35(C), pages 219-229.
    • Handle: RePEc:eee:finana:v:35:y:2014:i:c:p:219-229
    DOI: 10.1016/j.irfa.2014.09.006
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    References listed on IDEAS

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    1. Lisa Meulbroek, 2001. "The Efficiency of Equity-Linked Compensation: Understanding the Full Cost of Awarding Executive Stock Options," Financial Management, Financial Management Association, vol. 30(2), Summer.
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    8. Chen, Carl R. & Steiner, Thomas L. & Whyte, Ann Marie, 2006. "Does stock option-based executive compensation induce risk-taking? An analysis of the banking industry," Journal of Banking & Finance, Elsevier, vol. 30(3), pages 915-945, March.
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    1. Wang, Ying & Liu, Zisen & Wang, Xin, 2022. "The supply of analysts and earnings forecasts," International Review of Financial Analysis, Elsevier, vol. 84(C).

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