The impact of market competition on CEO salary in the US energy sector

In this work, we examine the impact of market competition on CEOs' salaries by analyzing a sample of allS&P American firms in the energy sector, in the 1992-2015 time-span, and measuring market competition by means of the so-called Herfindhal-Hirschman-Index. We divide industries into three sub-groups based on small, medium and high market concentration and try to expand our research by exploring the impact of the recent financial crisis. The paper investigates how CEOs' salaries are affected by firm-level determinants, e.g. firm size, returns on assets, returns on equity, capital expenditure, market concentration, Tobin's Q etc, as well as by the individual characteristics of each CEO, e.g. CEOs age, gender. Based on our findings, the market concentration index in the US energy sector has a negative and statistically significant impact on CEO salary for all firms that operate in either a highly monopolistic or a purely competitive environment. The results of this empirical work are robust after examining for different alternative high order fixed effects specifications.