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Tournament Theory And Its Relevance To Executive Pay Pdf

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Jing Chen jing2. In this paper, we test two models of executive pay that have not received much attention in research on Chinese listed companies: managerial power theory and tournament theory.

This assignment deals with the issue of tournament theory and will give an insight in its theoretical background and its relevance to executive pay. Moreover, the following pages will display the impacts of the tournament theory on organizations and its employees within a business context. The issue of Tournament Theory, which was first mentioned by Edward Lazear and Sherwin Rosen in Shen, Gentry and Tosi , ; Norton , 36 , is related to a special CEO and executive compensation structure that rather focuses on a reward system than on absolute performance compensation to the subject. The reward system implies a prize that is awarded to that person, especially to executives Shen, Gentry and Tosi , , who performed as the best between his or her evaluated peer group becoming eventually the CEO or another top executive. Indeed, the prize is considered as the compensation at that position which comes normally along with astronomical paypackages Anabtawi , 30; Shen, Gentry and Tosi , ; Demsetz , ; Harford

Tournament theory

In this study, we examine a compensation element that has not received so far considerable research attention—the dispersion of compensation across managers—and its impact on firm performance. We examine the implications of two theoretical models dealing with pay dispersion—tournament versus equity fairness. Tournament theory stipulates that a large pay dispersion provides strong incentives to highly qualified managers, leading to higher efforts and improved enterprise performance, while arguments for equity fairness suggest that greater pay dispersion increases envy and dysfunctional behavior among team members, adversely affecting performance. We also document that the positive association between firm performance and pay dispersion is stronger in firms with high agency costs related to managerial discretion. Furthermore, effective corporate governance, especially high board independence, strengthens the positive association between firm performance and pay dispersion. Our findings thus add to the compensation literature a potentially important dimension: managerial pay dispersion.

From its very beginnings, BRQ provides widespread coverage of high quality research in a broad range of topics such as human resource management, organization theory, strategic management, corporate governance, managerial economics, marketing, finance, accounting and operations management. It is therefore a multidisciplinary journal inspired by diversity and open to methodological plurality. Our main concern is that articles have strong theoretical foundations, meet the highest analytical standards, and provide new insights that contribute to the better understanding of managerial phenomena. The Impact Factor measures the average number of citations received in a particular year by papers published in the journal during the two receding years. It may be surprising that one of the most popular compensation schemes in business is so open to being hacked — to having managers cheat to win. We explore tournament theory to detail its vulnerabilities to various forms of cheating unilateral and multilateral.

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tournament theory

Skip to search form Skip to main content You are currently offline. Some features of the site may not work correctly. DOI: Chen and M. Ezzamel and Ziming. Chen , M. Ezzamel , Ziming.

With the dynamic development of market economy, the pay gaps in the diversified jobs are widening gradually and have become a center of attraction for academia and corporate world. However, the views of the academic community regarding economic consequences of pay gap within the firms have not been unified yet, and they have consequently developed two unique theories: tournament theory and behavior theory. The first theory argues that pay gap can have a positive incentive effect on senior executives and ordinary employees, saving the agency cost to the client and promoting sustainable development in the firm. On the other hand, behavior theory believes that pay gap would undermine the fairness of internal compensation and reduce enthusiasm and team cohesiveness of employees, thereby hindering the progress of the organization. Both of these perspectives have been supported by scholars despite having a few disagreements regarding the severity of impact.

AUSTRALIAN EXECUTIVE REMUNERATION: EVIDENCE ON STRUCTURE AND ACCOUNTING DETERMINANTS

Он вежливо улыбнулся озабоченной медсестре и вошел в будку. Сняв трубку, набрал номер справочной службы и через тридцать секунд получил номер главного офиса больницы. В какой бы стране вы ни находились, во всех учреждениях действует одно и то же правило: никто долго не выдерживает звонка телефонного аппарата. Не важно, сколько посетителей стоят в очереди, - секретарь всегда бросит все дела и поспешит поднять трубку. Беккер отбил шестизначный номер.

 Иного рода? - Сьюзан смотрела на него вопрошающе. Невзламываемый шифр - математическая бессмыслица. Он это отлично знает. Стратмор провел рукой по вспотевшему лбу. - Этот шифр есть продукт нового типа шифровального алгоритма, с таким нам еще не приходилось сталкиваться.

Все повернулись к экрану, где над всем этим хаосом появилась надпись: ВВЕСТИ ПАРОЛЬ. 3 - Да! - скомандовал Фонтейн.  - Нажимайте.

Executive pay dispersion, corporate governance, and firm performance

После множества поворотов и коротких рывков Беккер оказался на перекрестке трех улочек с табличкой Эскуина-де-лос-Рейес и понял, что уже был здесь минуту-другую. Притормозив, он задумался, в какую сторону повернуть, и в этот момент мотор его веспы кашлянул и заглох.

Я могу прямо сейчас отвести вас в участок… - Беккер выразительно замолчал и прищелкнул пальцами. - Или?.  - спросил немец с расширившимися от страха глазами. - Или мы придем к соглашению.

Сьюзан не верила ни единому его слову. Хейл подтянул ноги и немного приподнялся на корточках, желая переменить позу. Он открыл рот, чтобы что-то сказать, но сделать этого не успел. Когда Хейл перестал на нее давить, Сьюзан почувствовала, что ее онемевшие ноги ожили. Еще толком не отдавая себе отчета в своих действиях и повинуясь инстинкту, она резким движением согнула ноги и со всей силы ударила Хейла коленом в промежность, ощутив, как ее коленные чашечки впились в его мягкие незащищенные ткани.

Tournament Theory and its Relevance to Executive Pay

5 Comments

Archard B. 31.05.2021 at 00:43

Tournament theory is the theory in personnel economics used to describe certain situations where wage differences are based not on marginal productivity but instead upon relative differences between the individuals.

Hartman B. 01.06.2021 at 04:48

This study explores a relatively new source of Australian executive pay information disclosed in published Annual Reports since

Chappell P. 05.06.2021 at 15:37

In this chapter, we address three pay for performance PFP questions.

Kevin M. 08.06.2021 at 11:19

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