TY  - JOUR
T1  - Tournament Theory and the Influence of Managerial Power on
Corporate Performance
AU - Chang, Jui-Hsiu AU - Fu, Chung-Jen AU - Yang, Lee-Wen 
JO  - International Business Management
VL  - 11
IS  - 7
SP  - 1482
EP  - 1490
PY  - 2017
DA  - 2001/08/19
SN  - 1993-5250
DO  - ibm.2017.1482.1490
UR  - https://makhillpublications.co/view-article.php?doi=ibm.2017.1482.1490
KW  - Tournament theory
KW  -managerial power theory
KW  -optimal contraction approach
KW  -regarding
KW  -expand
KW  -managerial compensation contract
AB  - Modern companies generally separate ownership from management rights. High-level professional
managers are employed to make adequate decisions for their companies and offered a sizable salary enhance
corporate performance. Nevertheless, there consequently, exists agency problem in the company. Seeing this,
some scholars propose the application of optimal contraction approach to mitigate the agency problem. From
the optimal contraction approach, a company must provide appropriate level of compensation contract to
prevent agency problem from happening and to motivate top managers to expand efforts that meet
stockholder’s value. By applying tournament theory, we research into the links between managerial
compensation contract and firm performance. From the theoretical perspectives, we wonder whether
compensation differentials is influenced by managerial hierarchy and whether top managers exert crucial
influence, through their managerial power, on the company’s decisions and accordingly proceed to make an
impact on firm performance. Therefore, managerial power factor is added in this study. Empirical result shows
positive standpoint toward tournament theory which implies managerial compensation contract exerts assured
effect on firm performance. On the other hand, empirical result does not prove any positive significance
regarding managerial power toward firm performance, except that there is significant negative relation between
manager’s tenure and firm performance.
ER  -