Authority, Risk, and Performance Incentives: Evidence Fromdivisionmanager Positions inside Firms

@inproceedings{Aggarwal2007AuthorityRA,
  title={Authority, Risk, and Performance Incentives: Evidence Fromdivisionmanager Positions inside Firms},
  author={Rajesh Aggarwal and Ben L. Campbell and Francine Lafontaine and Vinay Nair and Paul E. Oyer},
  year={2007}
}
I show that performance incentives vary by decision-making authority of division managers. For division managers with broader authority, i.e., those designated as corporate officers, both the sensitivity of pay to global performance measures and the relative importance of global to local measures are larger, relative to non-officers. There is no difference in sensitivity of pay to local measures by officer status. These results support theories suggesting that authority over project selection… CONTINUE READING
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