Internal capital markets and firm-level compensation incentives for division managers

• 成果类型: Article
• 署名作者: Wulf, J
• 署名单位: University of Pennsylvania
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/338713
• 发表日期: 2002
• 页码: S219-S262
• 关键词: performance-measures; diversification; OWNERSHIP; CONTRACTS; COSTS

摘要

Do multidivisional firms structure compensation contracts for division managers to mitigate incentive problems in their internal capital markets? I find evidence that compensation and investment incentives are substitutes: firms providing a stronger link to firm performance in incentive compensation for division managers also provide weaker investment incentives through the capital budgeting process. Specifically, as the proportion of incentive pay for division managers that is based on firm performance increases, division investment is less responsive to division profitability. These findings are generally consistent with a model of influence activities by division managers in interdivisional capital allocation decisions.