Empirical Effects Of Performance Contracts
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The Empirical Effects Of Performance Contracts
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Author : Mary M. Shirley
language : en
Publisher:
Release Date : 2016
The Empirical Effects Of Performance Contracts written by Mary M. Shirley and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
On average, performance c ...
The Empirical Effects Of Performance Contracts
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Author : Mary M. Shirley
language : en
Publisher: World Bank Publications
Release Date : 1998
The Empirical Effects Of Performance Contracts written by Mary M. Shirley and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with Business enterprises categories.
May 1998 On average, performance contracts do not improve productivity in China's state enterprises and may even reduce it. But when they contain all the right features-managerial bonds, profit orientation, higher wage elasticity, and lower markup ratios-performance contracts can boost a firm's productivity growth rate by an estimated 10 percent. Performance contracts are widely used to reform state-owned enterprises. By June 1994, there were 565 such contracts in 32 developing countries, used principally to reform large utilities and other monopolies, and roughly another 103,000 in China, where they are also used to reform state manufacturing enterprises. A performance contract is a written agreement between the manager of a state enterprise (who promises to achieve specific targets in a certain time frame) and government (which-usually-promises to award achievement with a bonus or other incentive). Performance contracts are a variant of the pay-for-performance or incentive contracts often used to motivate managers in the private sector. In the public sector, they are viewed as a device to reveal information and motivate managers to exert effort. Shirley and Xu analyze China's experience with performance contracts in more than 400 state enterprises. China is a good place for such a study because no country has ever used them on such a scale or with such a variety of enterprises (mostly in the competitive sector). China also uses many different kinds of contracts, with different targets (more profit-, tax-, or output-oriented). Shirley and Xu find that performance contracts * On average, do not improve productivity in China's state enterprises and may even reduce it. * Are ineffective in competitive firms as well as monopolies. * Do more harm when they provide only weak incentives and when they do not reduce information asymmetry. They find no connection between variables for commitment and the effects of performance contracts. Design matters. When performance contracts contain all the good features-profit orientation, higher wage elasticity, and lower markup ratios-the firm's productivity growth rate could increase as much as 10 percent. The Chinese government was serious about implementing performance contracts, and used measures considerably more radical than other countries used, hailing the contract system as the official national mode for reforming state enterprises. But most of the contracts have had little or no effect on growth rates and the observed frequency of contracts with good provisions is exceedingly low. Perhaps the political economy of incentive contracts in government settings merits further study. Political considerations may preclude the design of incentive contracts for government actors that could produce the sort of productivity gains some private firms have achieved. One observer (Byrd 1991) points out that the central government gave local governments a good deal of discretion in implementing performance contracts and local governments had a tendency to adopt the lowest common denominator, a bare-bones performance contract. This paper-a product of the Development Research Group-is part of a larger effort in the group to understand state enterprises. The authors may be contacted at [email protected] or [email protected].
The Empirical Effects Of Performance Contracts
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Author : Shirley
language : en
Publisher:
Release Date : 2013
The Empirical Effects Of Performance Contracts written by Shirley and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Empirical Effects Of Performance Contracts
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Author : Mary M. Shirley
language : en
Publisher:
Release Date : 2010
Empirical Effects Of Performance Contracts written by Mary M. Shirley and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Performance contracts (PCs) - contracts signed between the government and state enterprise managers - have been used widely in developing countries. China's experience with such contracts was one of the largest experiments with contracting in the public sector, affecting hundreds of thousands of state firms, and offered a rare opportunity to explore how PCs work. On average, PCs did not improve performance and may have made it worse. But China's PCs were not uniformly bad; in fact, PCs improved productivity in slightly more than half of the participants. PC effects were on average negative because of the large losses associated with poorly designed PCs. Successful PCs were those that featured sensible targets, stronger incentives, longer terms, managerial bonds, and were in more competitive industries. Selecting managers through bidding was not associated with performance improvement. Good PC features were more often observed in state-owned enterprises (SOEs) under the oversight of local governments, that faced more competition, that were smaller in size, and that had better previous performance.
Effects Of Incentive Employment Contracts Of Performance And Information Revelation
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Author : Leslie Kren
language : en
Publisher:
Release Date : 1988
Effects Of Incentive Employment Contracts Of Performance And Information Revelation written by Leslie Kren and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988 with categories.
Effects Of Incentive Employment Contracts On Performance And Information Revelation Empirical Evidence
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Author : Leslie Kren
language : en
Publisher:
Release Date : 1991
Effects Of Incentive Employment Contracts On Performance And Information Revelation Empirical Evidence written by Leslie Kren and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with categories.
The Impact Of Incomplete Contracts On Economics
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Author : Philippe Aghion
language : en
Publisher: Oxford University Press
Release Date : 2015-12-22
The Impact Of Incomplete Contracts On Economics written by Philippe Aghion and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-12-22 with Business & Economics categories.
The 1986 article by Sanford J. Grossman and Oliver D. Hart titled "A Theory of Vertical and Lateral Integration" has provided a framework for understanding how firm boundaries are defined and how they affect economic performance. The property rights approach has provided a formal way to introduce incomplete contracting ideas into economic modeling. The Impact of Incomplete Contracts on Economics collects papers and opinion pieces on the impact that this property right approach to the firm has had on the economics profession.
An Empirical Examination Of Managerial Performance Contracts
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Author : Laura T. Starks
language : en
Publisher:
Release Date : 1984
An Empirical Examination Of Managerial Performance Contracts written by Laura T. Starks and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1984 with Contracts categories.
Understanding Psychological Contracts At Work
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Author : Neil Conway
language : en
Publisher: OUP Oxford
Release Date : 2005-11-17
Understanding Psychological Contracts At Work written by Neil Conway and has been published by OUP Oxford this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-11-17 with Business & Economics categories.
How can we understand the relationship between employer and employee? What determines the give and take of such relationships and what happens when they go wrong? This book is the first to provide a comprehensive and critical overview of what is now the major way of trying to understand the employment relationship - the concept of the psychological contract. Written contracts often specify very little in terms of the important details about what we are prepared to do for our employer and what we want back in return. The psychological contract considers these implicit or unwritten aspects of the employment relationship. What do employees really expect from work? What happens when the contract, or 'the deal', with their employer is broken? How well does the psychological contract help us understand what happens at work between an employee and their employer? Is the idea of practical value in managing employees? How can our understanding of this important concept be developed in the future? Starting with a history of the concept, from its emergence in the 1960s through to it finding wider acceptance in the 1990s, the authors trace the conflicting and changing definitions of the psychological contract. The shifting meaning of the concept allows possible methodological and conceptual weaknesses of the psychological contract to be explored, such as the conceptual emphasis on process within the employment relationship, which has so far been neglected by researchers. The authors start to address this issue by considering whether employees and employers can use what is known about the psychological contract to better manage the employment relationship. Written to provide a comprehensive yet critical introduction to the topic, Understanding Psychological Contracts at Work will be key reading for advanced students, lecturers, and researchers in Organizational Psychology, Organization Studies, Management Studies, Human Resource Management, Occupational Psychology; and professionals and practitioners in Occupational Psychology, Management Consultancy, Human Resource Management, Careers and Career Management, Career Counselling, Workplace Training.
Essays On Contracting
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Author : ORIE NEHEMIA SHELEF
language : en
Publisher:
Release Date : 2013
Essays On Contracting written by ORIE NEHEMIA SHELEF and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Contracts are an economic tool used to arrange transactions which are not tradable in simple spot markets. This thesis focuses on the implications of different kinds of contracts to understand behavior in complicated interactions. The first part of this thesis focuses on explicit formal contracts that provide non-linear payoffs and examines theoretically and empirically the implications for effort and risk-taking. The second part of this thesis focuses in contrast on implicit contracts. Starting from a theoretical perspective about how implicit contracts for influence buying might work in a setting that precludes explicit contracts. This helps explains empirical puzzles as well as has new predictions. I then show empirical evidence consistent with the predictions. In the first part, I explore managerial incentive contracts. Managerial incentives induce risk-taking as well as effort. Theoretical research has long considered risk-taking a potential side effect of incentives, but empirical investigation is limited. This thesis first develops nuanced predictions about how contracts in use in many industries induce risk-taking and effort. The contracts considered match closely those used in real-world contracts. The thesis then uses exogenous variation in hedge fund manager's incentives, one of the settings where these contracts are used, to examine both performance and risk-taking. I find that, consistent with theory, being farther below a key incentive threshold increases risk-taking and decreases performance. On average, a manager's risk-taking increases 50 percent and their performance falls 2.1 percentage points when he is below the incentive threshold. I also show, consistent with the theoretical predictions, risk-taking behavior is non-monotonic; very distant managers take less risk and perform better than less distant managers. Further, I examine the role of organizational features in impacting the responsiveness to explicit incentives and the mechanisms managers use to increase risk. My results highlight the importance of risk-taking in response to incentives designed to induce effort and inform empirical research, contract design, practitioners, and policy makers. The results also show that moral hazard, not just selection, is an important determination of manager performance. In the second part, I explore contracts for influence buying. Existing empirical evidence that finds very high actual or potential return to some campaign contributions and wonders, if contributions buy influence, why more exchange does not occur. Other empirical work has found consistent long-term relationships of contributions from interest groups to politicians. Yet, models of influence buying have treated the exchange as a simple spot transaction. This paper develops a formal model of relational influence buying between a firm and a politician where campaign contributions are exchanged for policy favors in a self-enforcing contract. This contract provides several insights. First, not all favors that have positive joint surplus to the firm and politician are contractible. Second, the model predicts that horizons of politicians will reduce the ability to raise funds. Third, the model provides empirical predictions for when firms should lobby themselves or outsource and on the structure of legislation. The first can explain why more, apparently valuable, trade does not occur. I find evidence consistent with the horizon effects from US Congress people's age and term limits in US state legislatures. The third insight speaks both to potential regulatory implications and implications for managers' influence activities. Finally, the insights from the model suggest empirical tools to detect influence buying without directly observing the favors.