Buying success or redistributing payment: bidirectional causality in Korean Professional Baseball League

Jye-Shyan Wang, Chih-Fu Cheng and Wen-jhan Jane

Eurasian Business Review, 2014, vol. 4, issue 2, 247-260

Abstract: Salary payments are important to us for understanding both the relationship and the causality between salary structures and team performance in labour market theory. Using salary data from the Korean Professional Baseball League (KPBL), this paper conducts Panel Granger tests to investigate the causality between pay and performance. Our empirical results show that the causality only runs from the dispersion of salary payment to team performance, but not vice versa. Moreover, the evidence also shows that total salary does not cause team performance, and vice versa. Therefore, payrolls cannot buy wins, and wins cannot bring payrolls in the KPBL. Copyright Eurasia Business and Economics Society 2014

Keywords: Equity theory; Korean professional baseball league; Panel Granger causality test; Salary regulation; Tournament theory (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s40821-014-0013-x

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