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Agency Theory and Variable Pay Compensation Strategies, Academy of Management Journal

Abstract

This study used a sample of middle-level managers to investigate the effects of organization-level agency-theory-based variables on the proportion of variable compensation that managers receive. Level of task programmability was associated with an increased use of variable pay, and long-term relationships between an agent and principal were associated with decreased use. Results supported the classical organization-theory prediction that under higher risk, organizations use higher proportions of variable pay; hut results question agency theory's ability to predict compensation strategy for middle-level managers in the high-risk situation.

Type

Article

Author(s)

Linda K. Stroh, Jeanne Brett

Date Published

1996

Citations

Stroh, K. Linda, and Jeanne Brett. 1996. Agency Theory and Variable Pay Compensation Strategies. Academy of Management Journal. 39(3): 751-767.

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