|
on Human Capital and Human Resource Management |
| By: | C. Bram Cadsby (Department of Economics and Finance, University of Guelph); Jim Engle-Warnick (McGill University); Tony Fang (Monash University); Fei Song (Ryerson University) |
| Abstract: | Tournaments are widely used to assign bonuses and determine promotions. Tournament-based compensation is motivating because of the link between relative performance and financial rewards. However, performing relatively well (poorly) may also yield psychological benefits (pain). This may also stimulate effort. Through a real-effort artefactual field experiment with factory workers in China, we examine how both psychological and financial incentives, together with attitudes toward risk, may influence motivation and performance. For comparison purposes, Chinese undergraduate students also participated in a comparable laboratory experiment. We provided performance-ranking information both privately and publicly, with and without rank based financial incentives. Our results show that performance-ranking information had a significant motivational effect on average performance for students, but not for workers. Adding financial incentives based on rank provided little evidence of further improvements. Much of the difference between workers and students can be explained by differences in attitudes toward risk. Indeed, for both groups the size of both financial and psychological incentive effects is inversely related to individual levels of risk aversion, and is positive and significant both for workers and for students who are sufficiently risk-tolerant. Lastly, performance did not deteriorate when incentives were removed, suggesting that they worked through the encouragement of learning. |
| Keywords: | incentives, social comparison, performance feedback, peer pressure, tournament, risk aversion, artefactual field experiment |
| JEL: | C91 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:gue:guelph:2014-03&r=hrm |
| By: | Vicente Cuñat; Mireia Giné; Maria Guadalupe |
| Abstract: | This paper estimates the effects of Say-on-Pay (SoP); a policy that increases shareholder "voice" by providing shareholders with a regular vote on executive pay. We apply a regression discontinuity design to the votes on shareholder-sponsored SoP proposals. Adopting SoP leads to large increases in market value (4.6%) and to improvements in long-term performance: profitability and labor productivity increase, while overheads and investment fall. In contrast, we find limited effects on pay levels and structure. This suggests that SoP operates as a regular vote of confidence, increasing efficiency and market value. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgdps:dp724&r=hrm |
| By: | Ferri, Fabrizio; Oesch, David |
| Abstract: | The literature on shareholder voting has mostly focused on the influence of proxy advisors on shareholder votes. We exploit a unique empirical setting enabling us to provide a direct estimate of management’s influence. Analyzing shareholder votes on the frequency of future say on pay votes, we find that a management recommendation for a particular frequency is associated with a 26% increase in voting support for that frequency. Additional tests suggest that the documented association is likely to capture a causal effect. Management influence varies across firms and is smaller at firms where perceived management credibility is lower. Compared to firms adopting an annual frequency, firms following management’s recommendation to adopt a triennial frequency are significantly less likely to change their compensation practices in response to an adverse say on pay vote, consistent with the notion that a less frequent vote results in lower management accountability. |
| Keywords: | Say on pay, say when on pay, shareholder votes, management influence, CEO compensation, shareholder activism |
| JEL: | G34 G38 J33 M12 |
| URL: | http://d.repec.org/n?u=RePEc:usg:sfwpfi:2013:29&r=hrm |
| By: | Alexandros Karakostas (Coventry University); Axel Sonntag (University of East Anglia); Daniel John Zizzo (University of East Anglia) |
| Abstract: | If principals are allowed to choose between a revenue sharing, a bonus and a trust contract, a large majority of experimental subjects choose the revenue sharing contract. We find that this choice is the most efficient while at the same time being fair in the Paretian sense that on average agents are not worse off than in the other contracts. Furthermore, the distribution of earnings is only mildly skewed towards the principal. We conclude that under revenue sharing contracts concerns for fairness can go in hand with the use of monetary incentives. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:13-03&r=hrm |
| By: | Fouarge, Didier (ROA, Maastricht University); Kriechel, Ben (Economix Research & Consulting); Dohmen, Thomas (University of Bonn) |
| Abstract: | We relate risk attitudes and patience of young graduates from high-school, college and university, measured around the time that they start their labor market career in a large representative survey, to the riskiness and timing of earnings in the occupations they choose to work in. We find a systematic positive and significant relation between willingness to take risks and measures of occupational earnings risks and employment risk that we derive from a large administrative data set. Patient individuals are significantly more likely to choose for occupations with a steep earnings profile. Individuals whose economic preferences are not well aligned with the riskiness and timing of earnings in their initial occupation are more likely to change to an occupation that better matches their economic preferences. |
| Keywords: | risk preferences, earnings risk, sorting, occupational choice |
| JEL: | J24 J31 D01 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8355&r=hrm |
| By: | Boeri, Tito (Bocconi University) |
| Abstract: | Two-tier bargaining structures, in which plant-level wage negotiations supplement industry-level wage setting, are present in a number of EU countries, as unions resist pressures for greater decentralization in wage determination. In principle, these two-tier structures could reconcile macroeconomic stability with a closer link between productivity and pay. Evidence from an ECB firm-level survey suggests, however, that two-tier regimes may end up getting the worst of either fully centralized and fully decentralized systems, as they do not allow incentive schemes to operate downwards, reduce the participation of firms to collective bargaining, and do not seem to improve either microeconomic and macroeconomic adjustment to shocks. |
| Keywords: | wage drift, favourability principle, productivity-related pay |
| JEL: | J31 J33 J51 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8358&r=hrm |
| By: | Rasmus Landersø (Rockwool Foundation Research Unit & Department of Business and Economics, Aarhus University); Helena Skyt Nielsen (Department of Business and Economics, Aarhus University); Marianne Simonsen (Department of Business and Economics, Aarhus University) |
| Abstract: | This paper investigates the effects of school starting age on crime while relying on variation in school starting age induced by administrative rules; we exploit that Danish children typically start first grade in the calendar year they turn seven, which gives rise to a discontinuity in childrens’ school starting age. Analyses are carried out using register-based Danish data. We find that higher age at school start lowers the propensity to commit crime, but that this reduction is caused by incapacitation while human capital accumulation is unaffected. Importantly, we also find that the individuals who benefit most from being old-for-grade are those with high latent abilities whereas those with low latent ability seem to be unaffected by being old-for-grade in school. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:rok:spaper:58&r=hrm |
| By: | Peter Cziraki; Moqi Xu |
| Abstract: | We use the length of employment contracts to estimate CEO turnover probability and its effects on risk-taking. Protection against dismissal should encourage CEOs to pursue riskier projects. Indeed, we show that firms with lower CEO turnover probability exhibit higher return volatility, especially idiosyncratic risk. An increase in turnover probability of one standard deviation is associated with a volatility decline of 17 basis points. This reduction in risk is driven largely by a decrease in investment and is not associated with changes in compensation incentives or leverage. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgdps:dp729&r=hrm |
| By: | Costanza Torricelli; Maria Cesira Urzì Brancati; Luca Mirtoleni |
| Abstract: | This paper implements the methodology proposed by Bell et al. (2013) for the English Premier League to test the performance of football club coaches in the Italian Serie A, so as to explore the robustness of this approach to a different setup. Our results show that, over the seasons 2011-12, 2012-13 and 2013- 14, only two coaches out of 49 outperform, three underperform, while the great majority performed as expected. It follows that conclusions about the appropriate sacking time are not easy and the final decision is determined by other circumstances. Although comparison with Premier League has to be taken with caution, our results show that, in the presence of the management structure and the tactical approach typical of Serie A, the model can pick up a few very extreme skill levels but it cannot differentiate among the great majority of coaches. |
| Keywords: | manager performance, football clubs, Italian premier league (Serie A), fixed effects, bootstrap |
| JEL: | M12 G11 C15 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:mod:wcefin:14107&r=hrm |
| By: | Rickard, Bradley J. |
| Keywords: | Labor and Human Capital, Political Economy, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:cudawp:180139&r=hrm |
| By: | Jung Hyun Choi; Richard K. Green |
| Abstract: | This paper examines the magnitude of human capital spillovers on unemployment. Using bothindividual and metropolitan level data, we find that the adult population share of collegegraduates is negatively associated with the unemployment rate. More specifically, we find thatthose who reside in MSAs with higher shares of college graduates are more likely to beemployed, even after controlling for individual, MSA and state level factors including individual’sown education level. The likelihood of being unemployed falls further for the non-collegegraduates compared to the college graduates. We also find that MSAs with higher shares ofcollege graduates have lower average unemployment rates. This education spillover is nottransitory but is an important factor that explains long-term divergences in the MSAunemployment rates. |
| Keywords: | education; umemployment |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:luk:wpaper:9319&r=hrm |
| By: | Dorra Talbi |
| Abstract: | The purpose of this study is to verify the impact of CEO Age on real earnings management. Our empirical study is based on a sample of 7481 American firms from 2000 to 2009. Firstly we document a positive and significant relation between CEO Age and real earnings management and as a supplement analysis we find that this relation is not monotonic, it have a U-Shape with an inflexion point equal to 48 years. Our study has useful implications for financial statement users and accounting profession. Firstly, the different stakeholders of firms managed by an old CEO should be more careful when evaluating the quality of firm’s financial statements. In addition, external auditors and SEC should be more diligent when dealing with financial reports elaborated by old CEOs. The results of this paper confirm that CEO characteristics are determinants in financial reporting quality and that financial statements users and accounting profession should take this on consideration. |
| Keywords: | Real earnings management, CEO Age, managerial myopia, risk-taking, behavior. |
| Date: | 2014–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-429&r=hrm |