Performance Pay and Managerial Experience in Multitask Teams: Evidence from within a Firm
نویسندگان
چکیده
This article exploits a quasi-experimental setting to estimate the impact that a commonly used performance-related pay scheme had on branch performance in a large distribution firm. The scheme, which is based on the Balanced Scorecard, was implemented in all branches in one division but not in another. Branches from the second division are used as a control group. Our results suggest that the Balanced Scorecard had some impact but that it varied with branch characteristics, and, in particular, branches with more experienced managers were better able to respond to the new incentives.
منابع مشابه
Reducing Moral Hazard in Employment Relationships: Experimental Evidence on Managerial Control and Performance Pay? Kirabo Jackson Associate Professor of Human Development and Social Policy
Moral hazard is endemic to employment relationships and firms often use performance pay and managerial control to address this problem. While performance pay has received much empirical attention, managerial control has not. Jackson and Schneider analyze data from a managerial-control field experiment in which an auto-repair firm provided detailed checklists to mechanics and monitored their use...
متن کاملManagerial Expertise, Private Information, and Pay-Performance Sensitivity
This paper characterizes optimal pay-performance sensitivities of compensation contracts for managers who have private information about their skills, and those skills affect their outside employment opportunities. The model presumes that the rate at which a manager’s opportunity wage increases in his expertise depends on the nature of that expertise, i.e., whether it is general or firm-specifi...
متن کاملPerformance Incentives Within Firms: The Effect of Managerial Responsibility
We examine the distribution of incentives across executives with explicit divisional responsibilities, those with broad oversight authority over the firm, and CEOs. Oversight executives have pay-performance incentives that are $1.22 per thousand dollar increase in shareholder wealth higher than those of divisional executives. For CEOs, incentives are $5.65 per thousand higher than for executive...
متن کاملWealth Creation and Managerial Pay: MVA and EVA as Determinants of Executive Compensation
The design of incentive compatible executive-compensation policies is a crucial element for firms that seek a competitive advantage in an effort to maximize owner wealth. In this paper, we examine the relationship between executive compensation and measures of firm performance that capture the economic profit earned by the firm, namely, EVA and MVA. We test the hypothesis that after controlling...
متن کاملThe Managerial Ability and Value of Cash: Evidence from Iran
This study investigates empirically the value investors place in excess cash holdingand how managerial ability impact on the value of cash holding for Iranianfirms from 2006 to 2014. In this research, managerial ability calculated by usingthe data envelopment analysis (DEA). Following the approach of Faulkender andWang, we find that the relation between managerial ability and value of cash hold...
متن کامل