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Incentive Compensation for Bank Directors: The Impact of Deregulation
Journal article

Incentive Compensation for Bank Directors: The Impact of Deregulation

David Becher, Terry Campbell and Melissa Frye
The Journal of business (Chicago, Ill.), v 78(5), pp 1753-1778
01 Sep 2005
url
https://stars.library.ucf.edu/facultybib2000/4986View
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Abstract

Banking industry Banks Boards of directors Deregulation Executive compensation Executives Impact analysis Incentive plans Interstate Banking & Branching Efficiency Act 1994-US Studies
Although deregulation leads to changes in the duties of boards of directors, little is known about changes in their incentives. U.S. banking deregulation and associated changes during the 1990s lends itself to a natural experiment. These industry shocks forced bank directors to face expanded opportunities, increased competition, and an expanding market for corporate control. While bank directors received significantly less equity-based compensation throughout most of the 1990s, by 1999, their use of such compensation is indistinguishable from a matched sample of industrial firms. Our results suggest firms respond to deregulation by improving internal monitoring through aligning directors' and shareholders' incentives. [PUBLICATION ABSTRACT]

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Domestic collaboration
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Business
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