We investigate whether social capital influences the use and effectiveness of tournament structure of compensation. We find that pay differentials between the CEO and other executives, or tournament, are lower in U.S. counties with higher social capital. In addition, lower pay differentials are...

We examine the relation between pay-performance sensitivity (PPS), the convexity of managerial compensation (Vega), and future stock risk and returns for a large sample of firms between 1992 and 2004. On average, both higher PPS and higher Vega are associated with lower future stock returns....