This paper examines CEO pay in the banking industry and the effectof deregulating the market for corporate control. Using panel dataon 147 banks over the 1980s, we find higher levels of pay incompetitive corporate control markets, i.e., those in whichinterstate banking is permitted. We also find a strongerpay-performance relation in deregulated interstate banking markets.Finally, CEO turnover increases substantially after deregulation.These results provide evidence of a managerial talent market — onewhich matches the level and structure of pay with thecompetitiveness of the banking environment.
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