Working paper
Competition and Executive Compensation: Evidence from Pharmaceutical Breakthrough Designations
SSRN
12/14/2022
Abstract
We study the effects of competition shocks on executive compensation. Breakthrough Therapy Designations (BTDs) instrument shocks to the product market position of BTD-recipients’ rivals. Rivals respond by increasing option-based compensation for CEOs and other executives. They also subsequently escalate developments of new drugs. Our results corroborate theoretical models wherein (i) firms facing competitive pressures optimally intensify innovation, and (ii) stock options encourage executives to undertake such innovation.
Details
- Title: Subtitle
- Competition and Executive Compensation: Evidence from Pharmaceutical Breakthrough Designations
- Creators
- Jon A GarfinkelMosab HammoudehSteven IrlbeckErik Lie
- Resource Type
- Working paper
- Publisher
- SSRN
- Number of pages
- 38 pages
- Language
- English
- Date posted
- 12/14/2022
- Date updated
- 07/20/2023
- Academic Unit
- Finance
- Record Identifier
- 9984398759202771
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