Rank-Order Tournaments and Incentive Alignment: The Effect on Firm Performance

By Jayant R. Kale, Ebru Reis, Anand Venkateswaran. 2009

486 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a58148ff370cc9e432130284ef783331915b2241

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Ethan Rouen
2. Qiang Cheng
3. Jimmy Lee
4. Terry Shevlin
5. Yuan Huang
6. O. Faleye
7. Zhihong Chen
8. Kuo-chiang Wei

In Economics and Econometrics

1. Ethan Rouen
2. Terry Shevlin
3. Jimmy Lee
4. Omesh Kini
5. Ryan Williams
6. O. Faleye
7. Qiang Cheng
8. Yuan Huang

Citations in the corpus

• Say on Pay Laws, Executive Compensation, Pay Slice, and Firm Valuation around the World (2013, unknown): “Such pay inequality can also influence firm value (e.g., Kale et al. (2009), Bebchuk et al. (2011), Burns et al. (2013)), which we analyze in the next section in conjunction with SoP laws.”
• Tournament Incentives, Firm Risk, and Corporate Policies (2012, methodology): “In all the regression tables previously reported in the paper, we follow Kale, Reis, and Venkateswaran (2009) and use the natural logarithm of the difference between the total compensation of the CEO and that of the median VP in the firm as our measure of tournament incentives.”
• Rethinking Measurement of Pay Disparity and Its Relation to Firm Performance (2019, methodology): “33 To further allay concerns about endogeneity, in untabulated analyses I conduct two-stage least squares regressions using industry (two-digit SIC code) median pay ratios as instruments for the ratios, since industry is exogenously determined and pay levels and structure are likely to be similar wi”
• Tournament Incentives and Corporate Fraud (2015, background): “Consistent with this finding, Kale, Reis, and Venkateswaran (2009) find that tournament incentives are positively associated with firm performance.”
• Industry Tournament Incentives (2018, unknown): “…increasing executive pay (Gabaix and Landier (2008)), external mobility (Ryan and Wang (2012)), hiring of CEOs from outside the firm (Murphy and Zábojník (2007); Cremers and Grinstein (2011)), and CEO turnover rate (Kaplan and Minton (2012)), we examine how the industry pay gap evolves over time.”
• Internal Governance and Real Earnings Management (2016, methodology): “The choice of the latter two instruments is based on related prior studies that utilize similar instruments (e.g., Kale et al. 2009; Bebchuk et al. 2011).”
• Executive Pay Disparity and the Cost of Equity Capital (2013, methodology): “A 2nd perspective, which we call the tournament perspective, sees a large CEO pay disparity as a huge incentive for other senior executives to compete for the CEO position (Lazear and Rosen (1981), Kale et al. (2009)).”
• The determinants and effects of CEO–employee pay ratios (2013, methodology): “Following the literature (e.g., Aggarwal and Samwick, 2003; Kale et al., 2009), we define the CEO’s incentive alignment as the change in the CEO’s firm-specific wealth for a $100 change in shareholder wealth, calculated as9: 9 We use stock ownership at the beginning of the year to obtain the…”