Bonus Rigidity and Future Performance: Theory and Evidence
Abstract
Drawing on the extensive economics literature on wage rigidity, we examine bonus rigidity and, in particular, the implications of downward bonus rigidity for future performance. We find distributional support for downward rigidity in bonus payments. More importantly, we find that bonus cuts have distinct negative implications for future firm performance. Indeed, our evidence indicates that bonus rigidity is the primary driver of the positive...
Paper Details
Title
Bonus Rigidity and Future Performance: Theory and Evidence
Published Date
Jan 1, 2012
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