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Scaling laws, talent amplification, and executive compensation in the commercial bank industry

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  • W. Walls

Abstract

This research takes an alternative approach in analyzing the distribution of executive compensation in the commercial banking industry. We make use of scaling laws—laws often applied in the physical sciences that relate the intensity of an event to its frequency—to quantify the distribution of compensation and to make inferences on the type of process that generates it. We find that the distribution of compensation for chief executive officers, chief financial officers and chief operating officers is consistent with the amplification of managerial talent. However, we find that senior lending officer compensation does not support such increasing returns to talent. (JEL G210, Y330) Copyright Springer 1999

Suggested Citation

  • W. Walls, 1999. "Scaling laws, talent amplification, and executive compensation in the commercial bank industry," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(2), pages 133-142, June.
    • Handle: RePEc:spr:jecfin:v:23:y:1999:i:2:p:133-142
    DOI: 10.1007/BF02745947
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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
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    Cited by:

    1. Bettencourt, Luis M.A. & Lobo, Jose & Strumsky, Deborah, 2007. "Invention in the city: Increasing returns to patenting as a scaling function of metropolitan size," Research Policy, Elsevier, vol. 36(1), pages 107-120, February.
    2. Saleh F. A. Khatib & Hamzeh Al Amosh & Husam Ananzeh, 2023. "Board Compensation in Financial Sectors: A Systematic Review of Twenty-Four Years of Research," IJFS, MDPI, vol. 11(3), pages 1-22, July.

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