Description
My coauthor, Hao Zhang at Rochester Institute of Technology, and I are invited to discuss our paper titled "Tournament Incentives and Firm Innovation" on Harvard Law School Forum on Corporate Governance.https://corpgov.law.harvard.edu/2016/10/18/tournament-incentives-and-firm-innovation/
The Harvard Law School Forum on Corporate Governance is co-sponsored by the Harvard Law School Program on Corporate Governance, the Program on Institutional Investors, and the Program on Law and Finance.
In our study, we examine the relation between pay disparity and firm innovation, where the pay gap between a CEO and the next layer of senior executives is used to measure promotion-based tournament incentives for non-CEO senior executives (VPs). According to tournament theory, we expect a larger pay gap would induce manager to exert higher effort and improve the quality of their innovation investments. Consistent with this view and measuring innovation efficiency with the number of patents per dollar of R&D expense, we indeed find firms that install higher tournament incentives display higher innovation efficiency.
From "Impact evidence" in impacts module:
Indicator and evidence title:
Tournament Incentives and Firm Innovation
Indicator and evidence summary:
In our article, Tournament Incentives and Firm Innovation, which was recently accepted for publication in the Review of Finance, we examine the relation between pay disparity and firm innovation.
From "Impact Keywords" in impacts module:
Free keywords: Corporate innovation; Patent; Tournament Incentive; Executive Compensation
| Period | 18 Oct 2016 |
|---|---|
| Held at | Harvard University, United States, Massachusetts |