{"title":"Non-CEO executives' intraorganizational competition incentives and corporate labour investment efficiency","authors":"Zhe Li, Bo Wang","doi":"10.1111/eufm.12463","DOIUrl":null,"url":null,"abstract":"<p>This study examines the impact of non-Chief Executive Officer (non-CEO) executives' intraorganizational promotion-based incentives, also known as tournament incentives, on corporate labour investment efficiency. We find that tournament incentives lead to inefficient labour investment, measured as the absolute deviation from optimal net hiring warranted by firm fundamentals. This positive relationship is weakened when non-CEO executives are less eager to compete in the tournament. Mediating analysis demonstrates that reduced team cohesion, captured by non-CEO executive turnover, mediates the relationship between tournament incentives and labour investment inefficiency. Our evidence is consistent with the dysfunctional view of tournament incentives and highlights the importance of non-CEO executives' incentives in corporate labour investment.</p>","PeriodicalId":47815,"journal":{"name":"European Financial Management","volume":"30 4","pages":"1868-1915"},"PeriodicalIF":2.1000,"publicationDate":"2023-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/eufm.12463","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Financial Management","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/eufm.12463","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study examines the impact of non-Chief Executive Officer (non-CEO) executives' intraorganizational promotion-based incentives, also known as tournament incentives, on corporate labour investment efficiency. We find that tournament incentives lead to inefficient labour investment, measured as the absolute deviation from optimal net hiring warranted by firm fundamentals. This positive relationship is weakened when non-CEO executives are less eager to compete in the tournament. Mediating analysis demonstrates that reduced team cohesion, captured by non-CEO executive turnover, mediates the relationship between tournament incentives and labour investment inefficiency. Our evidence is consistent with the dysfunctional view of tournament incentives and highlights the importance of non-CEO executives' incentives in corporate labour investment.
期刊介绍：
European Financial Management publishes the best research from around the world, providing a forum for both academics and practitioners concerned with the financial management of modern corporation and financial institutions. The journal publishes signficant new finance research on timely issues and highlights key trends in Europe in a clear and accessible way, with articles covering international research and practice that have direct or indirect bearing on Europe.
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