Efficient management remuneration plan design: a consideration of specific human capital investments

Article


Deegan, Craig. 1997. "Efficient management remuneration plan design: a consideration of specific human capital investments ." Accounting and Finance. 37 (1), pp. 1-40. https://doi.org/10.1111/j.1467-629X.1997.tb00312.x
Article Title

Efficient management remuneration plan design: a consideration of specific human capital investments

ERA Journal ID19059
Article CategoryArticle
Authors
AuthorDeegan, Craig
Journal TitleAccounting and Finance
Journal Citation37 (1), pp. 1-40
Number of Pages40
Year1997
Place of PublicationMelbourne, Australia
ISSN0810-5391
1467-629X
Digital Object Identifier (DOI)https://doi.org/10.1111/j.1467-629X.1997.tb00312.x
Web Address (URL)http://onlinelibrary.wiley.com/doi/10.1111/j.1467-629X.1997.tb00312.x/pdf
Abstract

This paper investigates the contractual relationship between the manager and the firm. The results indicate that cross-sectional variation in the components of management remuneration plans can be explained by variations in the specificity of both the manager's human capital investments and the firm's resources. Where the returns on the firm's resources are relatively more dependent upon (specific to) a particular manager, that manager is more likely to be able to negotiate his/her remuneration. The manager is also more likely to be paid on a long run contingent basis and to be offered deferred forfeitable remuneration. The results also indicate that the greater the firm-specificity of a manager's human capital investments the greater the likelihood that the manager is offered termination compensation as part of the remuneration package.

Keywordsasset specificity; attract; management remuneration plan; motivate; retain
ANZSRC Field of Research 2020529999. Other psychology not elsewhere classified
350503. Human resources management
480699. Private law and civil obligations not elsewhere classified
Public Notes

File reproduced in accordance with the copyright policy of the publisher/author.

Byline AffiliationsSchool of Accounting, Economics and Finance
Institution of OriginUniversity of Southern Queensland
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