Incentive Compensation and the Likelihood of Termination: Theory and Evidence from Real Estate Organizations
研究了两种管理薪酬激励手段——解雇威胁与绩效薪酬——之间的替代关系，利用房地产组织数据验证了当解雇激励较弱时，绩效薪酬激励更强的理论预测。
We analyze two managerial compensation incentive devices: the threat of termination and pay for performance. We first develop a simple model predicting that these devices are substitutes: when termination incentives are low, optimal contracts provide stronger pay‐for‐performance incentives. We then use data from real estate organizations to provide two independent tests of the model’s central prediction. First, we use the fact that chief executive officers of Real Estate Investment Trusts (REITs) and general partners of Real Estate Limited Partnerships (RELPs) perform similar tasks, yet organizational features of RELPs ensure that the latter are much harder to terminate. Consistent with the model, we find that pay‐for‐performance sensitivity is much higher for general partners of RELPs, where the termination threat is less credible. Second, we use a recent cross‐section of REITs to show that in property types where it is expected to be more costly to replace managers, those managers have stronger pay‐for‐performance incentives.