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Salary Gap And Operating Performance: Perspective Of Tournament Theory

Author

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  • Lee-Wen Yang
  • Yi-Fang Yang
  • Wun-Hnog Su

Abstract

According to the tournament theory, different hierarchies are paid different salaries. The salary gap between different hierarchies can motivate employees. The empirical data are from the 2005-2009 Survey Report of Audit Firms in Taiwan and published by the Financial Supervisory Commission (FSC). The hierarchy in audit firms is divided into certificate accountant, officer, assistant officer, and assistant. This study investigates the relationship between the salary gap in different hierarchies in the workplace and the operating performance of audit firms in Taiwan. The empirical results are consistent with the tournament theory and show that the salary differences in different hierarchies are statistically and positively related to the operating performance. The salary gap increases with the rise of hierarchies in audit firms. Employees in audit firms obtain promotion opportunities by continuously competing with coworkers. Accordingly, the association between operating performance and salary difference between certificate accountants and officers is the greatest. The salary gap increases with each level of the hierarchy along with promotion incentives for employees

Suggested Citation

  • Lee-Wen Yang & Yi-Fang Yang & Wun-Hnog Su, 2015. "Salary Gap And Operating Performance: Perspective Of Tournament Theory," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 9(1), pages 15-26.
    • Handle: RePEc:ibf:gjbres:v:9:y:2015:i:1:p:15-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Salary Gap; Tournament Theory; Operating Performance; Audit Firms;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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