Eloïc Peyrache

Performance Gender Gap: Does Competition Matter?

Using data for students undertaking a series of real-world academic examinations with high future payoffs, we examine whether the differences in these evaluations’ competitive nature generate a performance gender gap. In the univariate setting we find that women’s performance is first-order stochastically dominated by that of men when the competition is higher, whereas the reverse holds true in the less competitive or noncompetitive tests. These results are confirmed in the multivariate setting. Our findings, from a real-world setting with important payoffs at stake, are in line with the evidence from experimental research that finds that females tend to perform worse in more competitive contexts.

Intermediaries, Credibility and Incentives to Collude

A seller contracts and potentially colludes with a certification intermediary. We investigate the intermediarys incentives to collude, her pricing strategy, and the extent to which buyers rely on the intermediarys announcements. The probability of collusion is an endogenous variable, determined by the intermediarys pricing strategy. The extent to which the market relies on the intermediarys reports, the certification price and the intermediarys profit decrease as the intermediary becomes less patient. By making certification mandatory, the intermediary loses her ability to screen out low-quality sellers, which increases the probability of collusion.

Internal vs External CEO Choice and the Structure of Compensation Contracts

Any firm choosing a CEO faces a double problem: candidate selection and choice of a compensation scheme. We derive sufficient conditions where the unique optimal compensation scheme is a capped-bonus contract in a pure moral-hazard environment, while equity is used when the firm also faces adverse-selection. Then, we provide a rationale for the simultaneous increases in CEO pay, use of equity in compensation and external hiring of CEOs. Our results are consistent with empirical evidence that shows externally hired CEOs earn more than those internally hired and that externally hired CEOs get a higher fraction of their compensation equity based.

On CEO Appointment and Compensation

CEO compensation has received a lot of attention in the recent past, above all the widening gap between its level and that of the compensation of other employees. However, this increase in CEO pay was accompanied by changes in the structure of CEO pay (i.e., the increased use of stock options) and changes in CEO appointment (boards of directors choosing CEOs outside the firm rather than inside). In this article, we propose a amended version of the standard principal-agent model that provides a rationale for the simultaneous increases in (i) CEO pay, (ii) use of stock options in compensation schemes and (iii) hiring of CEOs externally. Furthermore, we derive new testable implications regarding compensation packages proposed to internally promoted and externally chosen CEOs.