An Equilibrium Theory of the Managerial Labor Market with Search and Contracting

2010 ◽  
Author(s):  
Carlos Corona ◽  
Georgios Farfaras ◽  
Jose M. Plehn-Dujowich
Keyword(s):  
Labor Market ◽  
Equilibrium Theory ◽  
Managerial Labor Market

China's Closed Pyramidal Managerial Labor Market and the Stock Price Crash Risk

2017 ◽  
Vol 93 (3) ◽  
pp. 105-131 ◽  
Author(s):  
Donghua Chen ◽  
Jeong-Bon Kim ◽  
Oliver Zhen Li ◽  
Shangkun Liang
Keyword(s):  
Labor Market ◽  
Stock Price ◽  
Negative Association ◽  
Political Connections ◽  
Crash Risk ◽  
The Political ◽  
Market Forces ◽  
Risk Averse ◽  
Foreign Investors ◽  
Managerial Labor Market

ABSTRACT Managers of China's state-owned firms work in a closed pyramidal managerial labor market. They enjoy non-transferable benefits if they choose to stay within this system. The higher up are they in this labor market hierarchy (their political ranks), the fewer are their outside employment opportunities. Due to career and wealth concerns, they are cautious and risk-averse when managing firms. We examine the effect of managers' political ranks on firms' stock price crash risk and find a negative association. This association mainly exists in firms with younger managers and managers with shorter tenure. Further, this effect is only significant in regions with weak market forces, in firms without foreign investors, without political connections, and during periods with no local government leaders' or managers' political promotions. We conclude that the political ranking system reduces the stock price crash risk. JEL Classifications: G30; J33.

On the Evidence of a Working Spouse Penalty in the Managerial Labor Market

ILR Review ◽  
1999 ◽  
Vol 52 (3) ◽  
pp. 410 ◽  
Author(s):  
Julie L. Hotchkiss ◽  
Robert E. Moore
Keyword(s):  
Labor Market ◽  
Managerial Labor Market

Pay-Performance Sensitivity in a Heterogeneous Managerial Labor Market

2004 ◽  
Vol 16 (1) ◽  
pp. 19-33 ◽  
Author(s):  
Hui Chen ◽  
Fei Leng
Keyword(s):  
Labor Market ◽  
Moral Hazard ◽  
Executive Compensation ◽  
Hybrid Model ◽  
Empirical Test ◽  
Empirical Work ◽  
Hazard Model ◽  
Performance Sensitivity ◽  
Managerial Labor Market ◽  
Low Pay

The persistently low pay-performance sensitivity between executive compensation and firm performance has puzzled both practitioners and academics. We propose a hybrid model that incorporates both moral hazard and adverse selection problems to explain this puzzle. We argue that the managerial labor market is heterogeneous in nature, not homogeneous as assumed by the pure moral hazard model and empirical work based on this model. We demonstrate that the optimal pay-performance sensitivity derived from the hybrid model is lower than that derived from the pure moral hazard model. Furthermore, we also show that pay-performance sensitivity is a function of the mix of types in the market. The more capable managers there are in the market, the more likely the market's average pay-performance sensitivity is high. We then conduct an empirical test and find evidence that is consistent with the prediction of our model.

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