Our review of the evidence found that the notion that higher pay leads to the selection of better executives is undermined by the prevalence of poor recruiting methods. Moreover, higher pay fails to promote better performance. Instead, it undermines the intrinsic motivation of executives, inhibits their learning, leads them to ignore other stakeholders, and discourages them from considering the...

This paper examines several policy regimes to deal with the problem that households suffer from environmental damage by firms in the same region. Taxation gives firms and households an incentive to stay away from each other. Laissez faire (compensation) only gives households (firms) an incentive to stay away from firms (households). We employ an evolutionary framework to analyze migration movem...

Using 1998-2005 EXECUCOMP data on Real Estate Investment Trust (REIT) CEOs, this study addresses some of the issues that arise when modeling CEO incentive-based compensation. The purpose is to investigate how profit efficiencies are impacted by CEO compensation and their composition of pay packages. Since a disproportionate amount of a REITs expenses are executive compensation related, this iss...

This paper investigates how executive compensation affects the reliability of the information disclosed to investors. When incentive contracts are based on reported profits, a manager may respond to an increase in incentive compensation by decreasing effort. To both motivate the manager and maintain the quality of disclosure, it is necessary to introduce third-party verification of profits. I a...

© 1992 by Cornell University 0001-8392/92/3702-0336/$1.00. Tournament models have developed into an important component of the theoretical literature on organizational reward systems. However, with one exception there have been no empirical tests of the incentive effects of tournament models in a field setting. Drawing on a panel data set from auto racing, we show that the tournament spread (pr...

BACKGROUND Survey response rates among physicians are declining, and determining an appropriate level of compensation to motivate participation poses a major challenge. OBJECTIVE To estimate the effect of permitting intensive care physicians to select their preferred level of compensation for completing a short Web-based survey on physician (1) response rate, (2) survey completion rate, (3) t...

We examine how firms evaluate and compensate their chief financial officers (CFOs). CFOs participate in decision making much like other executives, but unlike most other executives they have fiduciary responsibilities for reporting firms’ financial results and safeguarding the integrity of financial reporting. Responsibility for financial reporting raises the question of whether it is appropria...

In corporate practice, incentive schemes are often complicated even for simple tasks. Hence, the way they are communicated might matter. In a controlled field experiment, we study a minimally invasive change in the communication of a well-established incentive scheme – a reminder regarding the piece rate at the beginning of the shift. The experiment was conducted in a large firm where experienc...