Strategic Change, Multi-Task Managers And Executive Compensation
There is consensus that executive compensation is strongly tied to firm size and much less so to financial performance. Observed strategic change in corporations can affect these results. Based on multi-task theoretical considerations, the evidence for German industrial firms shows that elasticities in pay decrease only for large firms as they change from growth to downsizing strategies. Furthermore, pay-for-performance elasticities are contrary to predictions of agency theory. Both results support the belief that compensation contracts in public corporations are imperfectly aligned with firm performance and managers’ tasks.
Volume (Year): 53 (2001)
Issue (Month): 2 (April)
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