Fixed salary or incentive contract? The effect of stickiness of compensation contracts

Toshiaki Wakabayashi

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 1, 179-190

Abstract: This study adopts behavioural contract theory through a mathematical model and clarifies the situation in which a fixed–salary contract is preferable to an incentives–based one for the principal. Theoretically, the expected utility for the principal is higher under an incentives–based contract but, in reality, there are companies that employ people via fixed–salary contracts.This study fined that, in the multitasking case, a case exists in which the principal should offer a fixed–salary contract, and due to behavioural elements, compensation contracts will become inefficient; however, inefficiency may be reduced by using appropriate performance measures.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2019.1673191 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:29:y:2022:i:1:p:179-190

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2019.1673191

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().