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Management Fashion Pay-for-Performance for CEOs


Rost, Katja; Osterloh, Margit (2009). Management Fashion Pay-for-Performance for CEOs. Schmalenbach Business Review (sbr), 61(4):119-149.

Abstract

We show theoretically and empirically that Pay-for-Performance, like many management fashions, has not achieved its intended aim. Our research focuses on previous
empirical studies that examine the relation between variable executive pay and firm performance on various different dates. Our results indicate that a variable CEO income contributes very little to the increase of the firm’s performance, and that CEO salary and firm performance are not linked. The example of Pay-for-Performance shows that in the long run, many management fashions do not solve the problems that they promise to
solve.

We show theoretically and empirically that Pay-for-Performance, like many management fashions, has not achieved its intended aim. Our research focuses on previous
empirical studies that examine the relation between variable executive pay and firm performance on various different dates. Our results indicate that a variable CEO income contributes very little to the increase of the firm’s performance, and that CEO salary and firm performance are not linked. The example of Pay-for-Performance shows that in the long run, many management fashions do not solve the problems that they promise to
solve.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:April 2009
Deposited On:11 Feb 2010 13:49
Last Modified:05 Apr 2016 13:52
Publisher:Schmalenbach-Gesellschaft für Betriebswirtschaft
ISSN:1439-2917
Official URL:http://www.fachverlag.de/sbr/pdfarchive/einzelne_pdf/sbr_2009_apr_119-149.pdf
Permanent URL: https://doi.org/10.5167/uzh-29669

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