Corporate Restructuring, Downsizing and Managerial Compensation

Ulrike Graßhoff & Joachim Schwalbach
There is common consensus that managerial compensation is strongly tied to firm size and much less so to financial performance. One suspects that observed restructuring and downsizing in corporations in recent years may have an effect on these results. Based on multi-task theoretical considerations, our evidence for German industrial firms shows that pay for firm size elasticities decrease only for large firms as they change their strategy from growth to downsizing strategies. Furthermore, pay for...
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