nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2022‒08‒22
three papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Relative performance evaluation and competitive aggressiveness By Feichter, Christoph; Moers, Frank; Timmermans, Oscar
  2. Worker Mobility and Productivity Spillovers By Ohlsbom, Roope
  3. Trust and contracts: Empirical evidence By D'Acunto, Francesco; Xie, Jin; Yao, Jiaquan

  1. By: Feichter, Christoph; Moers, Frank; Timmermans, Oscar
    Abstract: We examine the relation between incentive plans based on relative performance and competitive aggressiveness. Using data on executive incentive-compensation contracts in large U.S. firms, we find a positive association between competitive aggressiveness and peer group overlap—that is, the extent to which two firms select each other as peers in these incentive plans. Our findings indicate that managers of such firms take more frequent as well as more complex competitive actions, relative to managers evaluated on relative performance without peer group overlap. Moreover, we show that these competitive tactics are more pronounced when managers compete against: (1) peers with similar grant sizes, (2) peers on similar performance metrics, and (3) peers in the same industry. Collectively, our findings provide evidence on how widely used incentive-compensation practices relate to strategic firm decisions.
    Keywords: collusion; competitive aggressiveness; peer group overlap; relative performance evaluation; strategic interaction
    JEL: M40
    Date: 2022–03–13
  2. By: Ohlsbom, Roope
    Abstract: Abstract Using linked employer-employee data from Finland, we examine the mobility of workers between establishments as a source of productivity-affecting knowledge spillovers. We find evidence that hiring workers from more productive establishments leads to higher productivity in the following year. For an average establishment, this productivity increase amounts to 0.45 percent in our most conservative estimate. The observed productivity gains hold for a variety of specifications, and changes in the receiving establishments’ human capital stock are ruled out as an explanation.
    Keywords: Worker mobility, Spillovers, Productivity, Human capital
    JEL: D22 D62 J21 J24 J62 L25
    Date: 2022–08–05
  3. By: D'Acunto, Francesco; Xie, Jin; Yao, Jiaquan
    Abstract: Trust between parties should drive contract design: if parties were suspicious about each others' reaction to unplanned events, they might agree to pay higher costs of negotiation ex ante to complete contracts. Using a unique sample of U.S. consulting contracts and a negative shock to trust between shareholders/managers (principals) and consultants (agents) staggered across space and over time, we find that lower trust increases contract completeness. Not only the complexity but also the verifiable states of the world covered by contracts increase after trust drops. The results hold for several novel text-analysis-based measures of contract completeness and do not arise in falsification tests. At the clause level, we find that non-compete agreements, confidentiality, indemnification, and termination rules are the most likely clauses added to contracts after a negative shock to trust and these additions are not driven by new boilerplate contract templates. These clauses are those whose presence should be sensitive to the mutual trust between principals and agents.
    Keywords: Empirical Contract Theory,Incomplete Contracts,Cultural Economics,Beliefs and Choice,Personnel Economics,Organizational Economics,FinTech andTextual Analysis,Consulting,Management,Non-Compete Agreements,Big Five,Fraud,Accounting,Disclosure
    JEL: D86 D91 J33 L14 Z10
    Date: 2022

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