【文章內(nèi)容簡介】 firm performance. In the context of shareholders–mangers agency costs, we provide evidence suggesting that managerial pay dispersion can potentially mitigate agency costs in firms that are difficult to monitor. More generally, our study supports the notion that the structure of executive pensation affects agency costs and firm performance. Prior research and our hypotheses 1. Tournament theory This theory (Lazear and Rosen,1981) views the advancement of executives in a corporate hierarchy as a contest in which individuals pete for promotion and rewards. Highperforming executives win promotions and receive prizes in the form of generous pay and perks in their new positions. The pensation spread across hierarchical levels (large‘‘prizes’’ at the top) provides extra incentives to participate in the managerial ‘‘tournament’’ and exert considerable efforts to win the top prize. The main elements of the tournament theory are as follows: (i) Tournaments reward players with prizes based upon relative performance. The best performer receives the largest prize while the worst performer receives the smallest. (ii) Rewards are intrinsically nonlinear. (iii) The spread in prizes increases with the number of petitors. (iv)Participants with low ability will choose higher risk strategies to increase the probability of winning. Thus, a participant’s ability is negatively related to the variability of his/her performance. Empirical evidence supporting the tournament theory was obtained in sport settings. For example, Ehrenberg and Bognanno (1990) examine the performance of golfers and conclude that as prize differentials increase, players’ performance improves. Becker and Huselid (1992) examine the performance of drivers in professional auto racing, and report that pay dispersion has positive incentive effects on both individual performance and driver safety. In a business setting, Main et al. (1993) use survey data for 200 firms during 1980–1984 and report that pay differential increases substantially as one ascends the corporate hierarchy, consistent with tournament theory’s prediction that extra weight on topranking prizes motivates participants to aspire to higher goals, and that the dispersion in top pensation increases with the number of contestants. The main finding of Main et al. (1993) is that firm performance is positively associated with executive pay dispersion. In a similar vein, Bognanno (2021) reports that the CEO pay rises with the number of vicepresidents peting for the top position. However, he finds that inconsistent with the tournament prediction, firms do not maintain shortterm promotion incentives, as longer time in position prior to promotion reduces the effect of pay increase from the promotion. Finally, Conyon et al. (2021) examine a sample of 100 large UK firms during 1997–1998 and find no evidence that larger pay dispersion is positively associated with improved firm performance. O’Reilly et al. (1988) report similar findings for the United States. Thus, the businesssetting evidence on the tournament theory is mixed and somewhat dated. 2. Equity fairness Economic theory asserts that in equilibrium wages are equal to employees’ marginal productivities. Such mainstream thinking has been challenged: Drawing on social exchange models, equity notions, and related work in sociology and psychology, Akerlof and Yellen (1988, 1990), Milgrom and Roberts (1988), and Levine (1991) argue that low pay dispersion may have a positive effect on employee efforts and productivity by creating harmonious and efficient labor relations thereby leading to higher output and productivity. In a similar vein, Levine (1991) dev