Deferred pay: Compliance and productivity with self-selection

Elizabeth Sheedy, Le Zhang and Yin Liao

Journal of Banking & Finance, 2023, vol. 154, issue C

Abstract: Financial services misconduct is a concern for many stakeholders and deferred variable remuneration has been proposed as an antidote. The implications for attracting/retaining productive individuals are unknown. This study investigates deferred payment mechanisms through experiments in student and professional samples, taking account of self-selection effects. We confirm that the introduction of deferrals would reduce misconduct through better monitoring. While some individuals eschew deferred payment, even in the presence of a deferral premium, productive individuals are under-represented in this group. Productive individuals are more likely to select deferred variable remuneration, so productivity outcomes are equal to or superior to alternative treatments.

Keywords: Deferred pay; Self-selection; Experiment; Compliance; Productivity (search for similar items in EconPapers)
JEL-codes: C90 J33 M52 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:154:y:2023:i:c:s0378426622002370

DOI: 10.1016/j.jbankfin.2022.106657

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