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Executive pay and firm performance

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Author Info
Jonathan S. Leonard

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Abstract

This study examines the effects of executive compensation policy and organizational structure on the performance of 439 large U.S. corporations between 1981 and 1985. Companies with long-term incentive plans enjoyed significantly greater increases in ROE (return on equity) than did companies without such plans, and by 1985 long-term incentive plans had been nearly universally adopted by large corporations. Corporate success was not significantly related to the level of, or degree of equity in, executive pay, or to the steepness of pay differentials across executive ranks; it was, however, positively related to the extent of hierarchical structure, which appears to have been the primary mechanism for sorting individuals by human capital endowments and performance. (Abstract courtesy JSTOR.)

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Publisher Info
Article provided by ILR Review, ILR School, Cornell University in its journal ILR Review.

Volume (Year): 43 (1990)
Issue (Month): 3 (February)
Pages: 13-29
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Handle: RePEc:ilr:articl:v:43:y:1990:i:3:p:13-29

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  1. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "Wage structure and firm productivity in Belgium," Working Papers DULBEA 05-14.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
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  2. Thierry Lallemand & Robert Plasman & François Rycx, 2005. "La dispersion salariale stimule-t-elle la performance d'une firme ?," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 63-70. [Downloadable!]
  3. Edward P. Lazear, 1996. "Incentives in Basic Research," NBER Working Papers 5444, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Fredrik Heyman, 2005. "Pay inequality and firm performance: evidence from matched employer--employee data," Applied Economics, Taylor and Francis Journals, vol. 37(11), pages 1313-1327, June. [Downloadable!] (restricted)
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  5. Marc Van Audenrode & Jonathan S. Leonard, 1996. "Worker's Limited Liability, Turnover and Employment Contracts," Annales d'Economie et de Statistique, ADRES, issue 41-42, pages 04, Janvier-J. [Downloadable!]
  6. Christian Belzil & Michael Bognanno, 2005. "Promotions, Demotions, Halo Effects and Earnings Dynamics of American Executives," IZA Discussion Papers 1630, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Christian Grund & Niels Westergaard-Nielsen, 2005. "The Dispersion of Employees' Wage Increases and Firm Performance," Bonn Econ Discussion Papers bgse3_2005, University of Bonn, Germany. [Downloadable!]
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  8. Charles Brown, 1990. "Wage Levels and Method of Pay," NBER Working Papers 3336, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Christian Grund, 2002. "The Wage Policy of Firms - Comparative Evidence for the U.S. and Germany from Personnel Data," Bonn Econ Discussion Papers bgse30_2002, University of Bonn, Germany. [Downloadable!]
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  10. John M. Abowd & David S. Kaplan, 1999. "Executive Compensation: Six Questions That Need Answering," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 145-168, Fall. [Downloadable!] (restricted)
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  11. Bingley, Paul & Eriksson, Tor, 2001. "Pay Spread and Skewness, Employee Effort and Firm Productivity," Working Papers 01-2, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
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  12. Gächter, Simon & Nosenzo, Daniele & Sefton, Martin, 2008. "The Impact of Social Comparisons on Reciprocity," IZA Discussion Papers 3639, Institute for the Study of Labor (IZA). [Downloadable!]
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  13. Christian Belzil & Michael Bognanno, 2008. "Promotions, Demotions, Halo Effects and the Earnings Dynamics of American executives," Post-Print halshs-00354270_v1, HAL. [Downloadable!]
  14. Nils Braakmann, 2008. "Intra-firm wage inequality and firm performance – First evidence from German linked employer-employee-data," Working Paper Series in Economics 77, University of Lüneburg, Institute of Economics. [Downloadable!]
  15. Luiz A. Esteves & Pedro S. Martins, 2008. "Is firm performance driven by fairness or tournaments? Evidence from Brazilian matched data," Working Papers 16, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research. [Downloadable!]
  16. Bouwens, J.F.M.G. & Lent, L.A.G.M. van, 2003. "Effort and selection effects of incentive contracts," Discussion Paper 130, Tilburg University, Center for Economic Research. [Downloadable!]
  17. John M. Abowd & Francis Kramarz & David N. Margolis, 1994. "High-Wage Workers and High-Wage Firms," CIRANO Working Papers 94s-23, CIRANO. [Downloadable!]
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  18. Kevin Hallock, 1995. "Executive Pay and Reciprocally Interlocking Boards of Directors," Working Papers 719, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  19. Gregory E. Sierra & Eli Talmor & James S. Wallace, 2004. "A unified analysis of executive pay: the case of the banking industry," Supervisory Policy Analysis Working Papers 2004-02, Federal Reserve Bank of St. Louis. [Downloadable!]
  20. Rudolf Winter-Ebmer & Josef Zweimueller, . "Intra-firm Wage Dispersion and Firm Performance," IEW - Working Papers iewwp008, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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