Investments in firm-specific human capital have come to play a central role in the value creation for most companies and organisations as job tasks have become ever more complex and demanding to carry out. Today successful performance of essential job tasks often necessitates highly specialised...

We identify differences in performance measurement precision between jobs within the same firm as an important, yet previously unidentified, source of pay dispersion. Downes and Choi (2014) conclude in their review of prior research that pay dispersion will not cause employees to withhold effort...

Recent regulation and legislation, along with the growing influence of compensation consultants and proxy advisors, have led to an increase in performance-contingent awards. A majority of these awards contain performance conditions tied explicitly to accounting measures. Both the structure of...

Using data that includes specific contractual details of Relative Performance Evaluation (RPE) contracts granted to executives for 1,833 firms for the period 1998 to 2012, we develop new methods to characterize RPE awards and measure their value and incentive properties. The frequency in the use...

This paper examines whether the risk-taking incentives induced by performance-based vesting (p-v) compensation influence bank loan contracting and credit ratings. Consistent with our risk-shifting hypothesis, we find that the p-v based compensation, as measured by the proportion of grant date...

We examine the relation between R&D intensity and the weights on ability indicators and financial performance measures in CEO compensation. The CEO’s technology-related ability is likely more important in R&D intensive firms. Therefore, we predict that these firms place higher weights on...

Using a formal principal-agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some agents care more for their principal when they are convinced that the principal cares for them. Principals can signal...

Using a formal principal-agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some agents care more for their principal when they are convinced that the principal cares for them. Principals can signal...

This paper studies the role of match quality for contractual arrangements, wage dynamics and workers' retention. We develop a model in which profit maximizing firms offer a performance-based pay arrangement to retain workers with relatively high match-specific productivity. The key implications...

By incorporating reciprocity in an otherwise standard principal-agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some, but not all, workers care more for their principal when they are convinced that...