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Pay Disparity, External Pay Alternatives and Turnover of the Second Best Paid Executive

Mankel, Stephanie, Richter, Ansgar and Uhlenbruck, Nikolaus "Klaus" (2014) Pay Disparity, External Pay Alternatives and Turnover of the Second Best Paid Executive [Working Paper]

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We contribute to the intersection of top executive turnover and compensation research by investigating pay structure implications on turnover, focusing on the second best-paid executive as the one being closest to winning the tournament for the best-paid position. Building on tournament theory and using competing-risks survival regression, we develop and test hypotheses with regard to the effects of pay disparity among a firm’s top executives and external pay alternatives on the exit of the second best-paid executive. For a sample of S&P 500 firms in the 14-year period between 1993 and 2006, we find that comparisons with higher paid executives and external pay alternatives matter for individuals’ decisions whether to stay in or to leave a pay tournament, whereas comparisons to lower paid executives do not.

Item Type: Working Paper
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Mankel, Stephanie
Uhlenbruck, Nikolaus "Klaus"
Date : 2 February 2014
DOI : 10.2139/ssrn.2388215
Uncontrolled Keywords : Compensation; Top Management Team Turnover; Tournament Theory und Survival Analysis
Additional Information : EBS Business School Research Paper No. 14-09
Depositing User : Clive Harris
Date Deposited : 15 Dec 2017 11:21
Last Modified : 16 Jan 2019 19:06

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