Ikäheimo, S., Kallunki, J.-P., Moilanen, S., & Schiehll, E. (2017). Do White-Collar Employee Incentives Improve Firm Profitability? Journal of Management Accounting Research, 30(3), 95–115. https://doi.org/10.2308/jmar-51902
Do white-collar employee incentives improve firm profitability?
|Author:||Ikäheimo, Seppo1; Kallunki, Juha-Pekka2,3,4; Moilanen, Sinikka2;|
1Aalto University School of Business, Department of Accounting P.O. Box 11000, FI-00076 AALTO, Finland
2University of Oulu, Department of Accounting P.O. Box 4600, FI-90014 University of Oulu, Finland
3Stockholm School of Economics, Department of Accounting
4Aalto University School of Business, Department of Accounting
5HEC-Montréal, Department of Accounting 3000, Chemin de la Côte-Sainte-Catherine, Bureau 5369 Montréal QC H3T 2A7, Canada
|Online Access:||PDF Full Text (PDF, 0.6 MB)|
|Persistent link:|| http://urn.fi/urn:nbn:fi-fe2021090144965
American Accounting Association,
|Publish Date:|| 2021-09-01
We use proprietary archival compensation panel data from Finnish white-collar employees (WCEs) over the period of 2002 to 2011 in order to examine the relationship between performance-based incentives for WCEs and the future profitability of the firm as well as to determine whether this association is moderated by task complexity. While many studies examine the determinants and performance effects of CEO compensation, virtually no evidence has been presented to indicate that explicit financial incentives for WCEs improve the profitability of the firm. Our empirical results show that performance-based incentives for WCEs are significantly positively related to the future return-on-assets, return-on-equity, and profit margin ratios of the firm. We also find that this effect comes from the performance-based incentives for low-level WCEs, corroborating the importance of implementing performance-based incentives also to low-task complexity jobs.
Journal of management accounting research
|Pages:||95 - 115|
|Type of Publication:||
A1 Journal article – refereed
|Field of Science:||
512 Business and management
© 2018 American Accounting Association. The final authenticated version is available online at https://doi.org/10.2308/jmar-51902.