Does firm life cycle have impacts on managerial promotion tournament incentives?. Issue 4 (November 2021)

• Record Type: Journal Article
• Authors: Chowdhury, Hasibul; Shams, Syed
• Is Part Of: Australian journal of management. Volume 46:Issue 4(2021)
• Page Start: 593
• Page End: 628
• Publication Date: 2021-11
• Subjects: Firm life cycle -- tournament incentives; Management -- Periodicals; Management -- Australia -- Periodicals; Business enterprises -- Finance -- Periodicals; Industrial management -- Australia -- Periodicals; 330
• DOI: 10.1177/0312896220974417
• Languages: English
• ISSNs: 0312-8962

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