Tournament incentives, age diversity and firm performance

This study introduces a new dimension, age diversity of non-CEO executives, which moderates the relationship between promotion-based tournament incentives, measured as pay gap CEO and firm performance. For sample Chinese listed firms from 2005 to 2015, we find that incentives for executives relate positively is weaker when are different cohorts, whereas effect enhanced same cohort. The negative moderation more pronounced in state Northern China Plain cultural region. disappears with CEOs who have overseas experience. We reason peer pressure among similar-aged enhances competition hierarchy reduces younger compete. Our findings important implications not only China, but also countries regions where seniority highly valued setting executive compensation optimizing organizational structure.