1. Publications
  2. SSRN Working Papers, 2018

Selection Versus Incentives in Incentive Pay: Evidence from a Matching Model

Higher incentive pay is associated with better firm performance. I introduce a model of CEO-firm matching to disentangle the two confounding effects that drive this result. On one hand, higher incentive pay directly induces more effort; on the other hand, higher incentive pay indirectly attracts more talented CEOs. I find both effects are essential to explain the result, with the selection effect accounting for 12.7% of the total effect. The relative importance of the selection effect is the largest in industries with high talent mobility and in more recent years.

04. June 2018

Authors Shuo Xia

See Publication

Keywords

incentive pay incentives firm performance productivity

Whom to contact

For Researchers

Professor Shuo Xia, PhD
Professor Shuo Xia, PhD
Economist

If you have any further questions please contact me.

+49 345 7753-875 Request per E-Mail

For Journalists

Dr Wolfgang Sender
Dr Wolfgang Sender
Head of Public Relations

If you have any further questions please contact me.

+49 345 7753-720 Request per E-Mail
Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoSupported by the BMWK