This paper examines the relation between tournament incentives and reserve management. We find a positive relation between internal tournament incentives and reserve errors, implying that a larger pay gap as a tournament prize induces vice presidents (VPs) to overestimate loss reserves. In other...

We model and empirically assess industry tournament incentives for CEOs. The measures we develop for the tournament prize derive from the compensation gap between the CEO at her firm and the highest-paid CEO among similar competing firms. The model predicts that firm performance and risk...

Are firms' financial disclosure decisions affected by executive compensation at other firms? We find that a CEO's pay gap relative to the highest CEO pay among industry peers, defined as industry tournament incentives, can lead to distortions in corporate financial disclosures. Our analyses show...

This paper investigates the effect of superstar CEOs on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to the award. The effect is more pronounced for...

We develop a structural industry equilibrium model to show how competitive CEO-firm matching and product markets jointly determine firm value and CEO pay. We analytically derive testable implications for the effects of product market characteristics on firm size, CEO pay, and CEO impact on firm...

Our paper examines the relationship between industry tournament incentives for CEOs and corporate innovation. We find that the external pay gap is positively associated with subsequent innovation output and its economic value. Our results are robust to using different industry classifications,...