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Corporate Tournaments and Executive Compensation: Evidence from the UK

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>08/2001
<mark>Journal</mark>Strategic Management Journal
Issue number8
Volume22
Number of pages11
Pages (from-to)805-815
Publication statusPublished
Original languageEnglish

Abstract

This study tests the implications of tournament theory using data on 100 U.K. stock market companies, covering over 500 individual executives, in the late 1990s. Our results provide some evidence consistent with the operation of tournament mechanisms within the U.K. business context. Firstly, we find a convex relationship between executive pay and organizational level and secondly, that the gap between CEO pay and other board executives (i.e., tournament prize) is positively related to the number of participants in the tournament. However, we also show that the variation in executive team pay has little role in determining company performance.