Managerial Incentives and Voluntary Turnover

45 Pages Posted: 16 Feb 2009 Last revised: 2 Dec 2014

See all articles by Jayant R. Kale

Jayant R. Kale

Northeastern University

Ebru Reis

Istanbul Bilgi University

Anand Venkateswaran

Northeastern University - Finance and Insurance Area

Date Written: February 15, 2009

Abstract

We study the issue to managerial retention by examining the relation between managerial incentives and voluntary turnover. Our analysis uses a unique dataset which comprises of over 3,000 managerial turnovers about a third of which are voluntary. We find that firms that have a higher inequality in their compensation schemes are more likely to experience higher resignations. We also find that managers take into account their compensation relative to their peers within the firm as well as those in the market, in their resignation decisions. The likelihood of resignations is also affected by the mix of short-term and long-term compensation, equity ownership in the firm, and the overall level of compensation inequality among top executives.

Keywords: Managerial Incentives, Tournaments, Executive Compensation, Turnover

JEL Classification: G34, G35, J33, L14, L35

Suggested Citation

Kale, Jayant Raghunath and Reis, Ebru and Venkateswaran, Anand, Managerial Incentives and Voluntary Turnover (February 15, 2009). Available at SSRN: https://ssrn.com/abstract=1343934 or http://dx.doi.org/10.2139/ssrn.1343934

Jayant Raghunath Kale

Northeastern University ( email )

Boston, MA 02115
United States

Ebru Reis

Istanbul Bilgi University ( email )

Eski Silahtarağa Elektrik Santralı
Silahtarağa Mah. Kazım Karabekir Cad. No: 1 Eyüp
Istanbul, 34060
Turkey

Anand Venkateswaran (Contact Author)

Northeastern University - Finance and Insurance Area ( email )

Boston, MA 02115
United States

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