Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms
This thesis investigates the short and long-term effects of pay dispersion on firm performance in publicly listed Swedish firms. Pay dispersion refers to the difference in compensation between or within organizational levels. There are two contradicting theoretical views of pay dispersions effect on...
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Uppsala universitet, Företagsekonomiska institutionen
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ndltd-UPSALLA1-oai-DiVA.org-uu-3247982017-08-23T05:08:13ZDoes pay dispersion affect firm performance? : A study of publicly traded Swedish firmsengAxelsson, JuliusUlander, EmilUppsala universitet, Företagsekonomiska institutionenUppsala universitet, Företagsekonomiska institutionen2017pay dispersionfirm performanceSwedish firmstournament theoryfairness approachesBusiness AdministrationFöretagsekonomiThis thesis investigates the short and long-term effects of pay dispersion on firm performance in publicly listed Swedish firms. Pay dispersion refers to the difference in compensation between or within organizational levels. There are two contradicting theoretical views of pay dispersions effect on firm performance. While tournament theory suggests that high pay dispersion increase employees’ incentives to exert higher effort, thus increasing firm performance, fairness approaches predicts that high pay dispersion creates feelings of unfairness, thus negatively affecting firm performance. Based on these theories and previous research, Hypothesis 1 predicts a positive short-term effect of pay dispersion on firm performance, and Hypothesis 2 predicts a negative long-term effect of pay dispersion on firm performance. Using a first differences fixed-effects regression including controls for firm characteristics and corporate governance indicators, three measures of pay dispersion are tested on two proxies for firm performance (price to book and return on assets). We conclude after extensive robustness tests that pay dispersion has no effect on firm performance, neither on short nor on long-term. Therefore, both hypotheses are rejected. Student thesisinfo:eu-repo/semantics/bachelorThesistexthttp://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-324798application/pdfinfo:eu-repo/semantics/openAccess |
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pay dispersion firm performance Swedish firms tournament theory fairness approaches Business Administration Företagsekonomi |
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pay dispersion firm performance Swedish firms tournament theory fairness approaches Business Administration Företagsekonomi Axelsson, Julius Ulander, Emil Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
description |
This thesis investigates the short and long-term effects of pay dispersion on firm performance in publicly listed Swedish firms. Pay dispersion refers to the difference in compensation between or within organizational levels. There are two contradicting theoretical views of pay dispersions effect on firm performance. While tournament theory suggests that high pay dispersion increase employees’ incentives to exert higher effort, thus increasing firm performance, fairness approaches predicts that high pay dispersion creates feelings of unfairness, thus negatively affecting firm performance. Based on these theories and previous research, Hypothesis 1 predicts a positive short-term effect of pay dispersion on firm performance, and Hypothesis 2 predicts a negative long-term effect of pay dispersion on firm performance. Using a first differences fixed-effects regression including controls for firm characteristics and corporate governance indicators, three measures of pay dispersion are tested on two proxies for firm performance (price to book and return on assets). We conclude after extensive robustness tests that pay dispersion has no effect on firm performance, neither on short nor on long-term. Therefore, both hypotheses are rejected. |
author |
Axelsson, Julius Ulander, Emil |
author_facet |
Axelsson, Julius Ulander, Emil |
author_sort |
Axelsson, Julius |
title |
Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
title_short |
Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
title_full |
Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
title_fullStr |
Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
title_full_unstemmed |
Does pay dispersion affect firm performance? : A study of publicly traded Swedish firms |
title_sort |
does pay dispersion affect firm performance? : a study of publicly traded swedish firms |
publisher |
Uppsala universitet, Företagsekonomiska institutionen |
publishDate |
2017 |
url |
http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-324798 |
work_keys_str_mv |
AT axelssonjulius doespaydispersionaffectfirmperformanceastudyofpubliclytradedswedishfirms AT ulanderemil doespaydispersionaffectfirmperformanceastudyofpubliclytradedswedishfirms |
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