It is difficult to test the prediction that future career prospects create implicit effort incentives because researchers cannot randomly “assign” career prospects to economic agents. To overcome this challenge, we use data from professional soccer, where employees of the same club face...

It is difficult to test the prediction that future career prospects create implicit effort incentives because researchers cannot randomly “assign” career prospects to economic agents. To overcome this challenge, we use data from professional soccer, where employees of the same club face...

This paper investigates the effects of managerial incentives on favoritism in promotion decisions. First, we theoretically show that favoritism leads to a lower quality of promotion decisions and in turn lower efforts. But the effect can be mitigated by pay-for-performance incentives for...

This paper studies the effect of product market competition on the compensation packages that firms offer to their executives and in particular its impact on the sensitivity of pay to performance. To measure the effect of competition we use two different identification strategies on a panel of...

Promotions serve two purposes. They ought to provide incentives for employees and to select the best employee for a management position. However, if non-contractible managerial decision rights give rise to private benefits and preference misalignment between managers and the firm, these two...

The aim of the paper is to test two hypotheses: on one hand, the aim is to analyse if firm’s executive rewards can be explained just by the hierarchical structure of the firm (Model One) while on the other we want to study the correlation between the level of Chief Executive Officer (CEO)...

In contrast to the recent past, there is now widespread concern about the apparent excesses of some pay structures in corporate businesses. Top pay has risen much faster than average levels of pay in the last twenty years. This is in part the consequence of globalisation and developments in...

This study investigates the Newsvendor Contest: two newsvendors not only earn profits but also compete for a fixed bonus awarded to one of them whose realized profit is higher than that of the other contender. We analyze both the simultaneous-move game, which is relevant to such business...

Companies employ managers for either practical, legal or administrative reasons. However, no matter what the reason, the good performance of managers and the success of companies are vital elements for firms. At this point, managerial incentives play a key role. In this paper, we use the VFJS...