Justifying top management pay in a transitional economy

We investigate some aspects of top management pay in China\u27s listed firms. We find positive pay and performance sensitivities and elasticities for top executives. In terms of magnitude, these sensitivities are similar to those reported in U.S. firms during the 1970s. However, the pay and performance relation is slightly weaker for firms located in less developed provinces. We also find that the pay disparities between top managers and employees are positively related to a firm\u27s performance. Thus, it appears that any deviation away from a manager-worker compensation norm has to be justified by superior firm performance. In additional analyses, we find that managers\u27 perquisites are not related to performance

Promotion Determinants in Corporate Hierarchies: An Examination of Fast Tracks and Functional Area

This chapter estimates a dynamic reduced-form model of intra-firm promotions using an employer–employee panel of over 300 of the largest corporations in the United States in the period from 1981 to 1988. The estimation conditions on unobserved individual heterogeneity and allows for both an endogenous initial condition and sample attrition linked to individual heterogeneity in demonstrating the relative importance of variables that influence promotion. The role of the executive’s functional area in promotion is considered along with the existence and source of promotion fast tracks. We find that while the principal determinant of promotions is unobserved individual heterogeneity, functional area has a high explanatory power, resulting in promotion probabilities that differ by functional area for executives at the same reporting level and firm. No evidence is found that an executive’s recent speed of advancement in pay grade has a positive causal impact on in-sample promotions after conditioning on the executive’s career speed of advancement, except for the lowest level executives the data. Fast tracks appear to largely result from heterogeneity in persistent individual characteristics, not from an inherent benefit in recent advancement itself

A Survey of Experimental Research on Contests, All-Pay Auctions and Tournaments

Many economic, political and social environments can be described as contests in which agents exert costly efforts while competing over the distribution of a scarce resource. These environments have been studied using Tullock contests, all-pay auctions and rankorder tournaments. This survey provides a review of experimental research on these three canonical contests. First, we review studies investigating the basic structure of contests, including the contest success function, number of players and prizes, spillovers and externalities, heterogeneity, and incomplete information. Second, we discuss dynamic contests and multi-battle contests. Then we review research on sabotage, feedback, bias, collusion, alliances, and contests between groups, as well as real-effort and field experiments. Finally, we discuss applications of contests to the study of legal systems, political competition, war, conflict avoidance, sales, and charities, and suggest directions for future research. (author's abstract