Does firm life cycle have impacts on managerial promotion tournament incentives?

Hasibul Chowdhury and Syed Shams
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Hasibul Chowdhury: UQ Business School, The University of Queensland, Brisbane, QLD, Australia
Syed Shams: School of Commerce, University of Southern Queensland, Springfield, QLD, Australia

Australian Journal of Management, 2021, vol. 46, issue 4, 593-628

Abstract: We examine whether and how firm-level promotion tournament incentives for executives, measured by the pay gap between a chief executive officer (CEO) and non-CEO executives, vary in different corporate life-cycle stages. Results show that managerial tournament incentives are higher in growth and mature life-cycle stages than in introduction and decline stages. In additional analyses, we find that firms design compensation contracts for growth and mature life-cycle stages with a target to increase tournament incentives for non-CEO executives that induce managerial risk-taking behaviour, leading to high productivity and performance. JEL Classification: G30, M12

Keywords: Firm life cycle; tournament incentives (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:46:y:2021:i:4:p:593-628

DOI: 10.1177/0312896220974417

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