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This study investigates how the relationship between bank performance and executive compensation is affected by the degree of an executive’s managerial discretion. Managerial discretion is captured by two industry-specific attributes: a bank’s strategic domain, and its regulatory environment. Executive compensation is found to be more related to bank performance in a context of high managerial discretion than in a context of low managerial discretion. © 1997 by John Wiley & Sons, Ltd.
Magnan et al. (Fri,) studied this question.