Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association
This article explores whether pay decisions based on pre-contract efficiency are necessarily correct. Overcoming methodology problems of previous studies, we use each player’s contract of National Basketball Association (NBA) as an observation. The empirical results show that managers indeed pay the...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
SAGE Publishing
2023-11-01
|
| Series: | SAGE Open |
| Online Access: | https://doi.org/10.1177/21582440231204149 |
| _version_ | 1797637333949874176 |
|---|---|
| author | Riguang Wen Qun Cao Huijuan Wang |
| author_facet | Riguang Wen Qun Cao Huijuan Wang |
| author_sort | Riguang Wen |
| collection | DOAJ |
| description | This article explores whether pay decisions based on pre-contract efficiency are necessarily correct. Overcoming methodology problems of previous studies, we use each player’s contract of National Basketball Association (NBA) as an observation. The empirical results show that managers indeed pay their employees according to an evaluation of their pre-contract efficiency. However, the pay decisions are not correct. Relative to the final year of the last contract, employees’ efficiency in the first year of the current contract decreases with increased salary. The reason is that managers put more weight on players’ efficiency in the final year of the last contract than on the average efficiency. Our findings deepen our understanding of the mechanism of compensation contract. |
| first_indexed | 2024-03-11T12:46:52Z |
| format | Article |
| id | doaj.art-954f72ada66d4c29b803ac0907913584 |
| institution | Directory Open Access Journal |
| issn | 2158-2440 |
| language | English |
| last_indexed | 2024-03-11T12:46:52Z |
| publishDate | 2023-11-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | SAGE Open |
| spelling | doaj.art-954f72ada66d4c29b803ac09079135842023-11-04T17:33:30ZengSAGE PublishingSAGE Open2158-24402023-11-011310.1177/21582440231204149Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball AssociationRiguang Wen0Qun Cao1Huijuan Wang2Shantou University, Guangdong, ChinaMacau University of Science and Technology, Taipa, ChinaZhejiang University of Finance and Economics, Hangzhou, ChinaThis article explores whether pay decisions based on pre-contract efficiency are necessarily correct. Overcoming methodology problems of previous studies, we use each player’s contract of National Basketball Association (NBA) as an observation. The empirical results show that managers indeed pay their employees according to an evaluation of their pre-contract efficiency. However, the pay decisions are not correct. Relative to the final year of the last contract, employees’ efficiency in the first year of the current contract decreases with increased salary. The reason is that managers put more weight on players’ efficiency in the final year of the last contract than on the average efficiency. Our findings deepen our understanding of the mechanism of compensation contract.https://doi.org/10.1177/21582440231204149 |
| spellingShingle | Riguang Wen Qun Cao Huijuan Wang Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association SAGE Open |
| title | Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association |
| title_full | Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association |
| title_fullStr | Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association |
| title_full_unstemmed | Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association |
| title_short | Are Pay Decisions Based on Pre-Contract Efficiency Necessarily Correct? Evidence From Players Contracts of National Basketball Association |
| title_sort | are pay decisions based on pre contract efficiency necessarily correct evidence from players contracts of national basketball association |
| url | https://doi.org/10.1177/21582440231204149 |
| work_keys_str_mv | AT riguangwen arepaydecisionsbasedonprecontractefficiencynecessarilycorrectevidencefromplayerscontractsofnationalbasketballassociation AT quncao arepaydecisionsbasedonprecontractefficiencynecessarilycorrectevidencefromplayerscontractsofnationalbasketballassociation AT huijuanwang arepaydecisionsbasedonprecontractefficiencynecessarilycorrectevidencefromplayerscontractsofnationalbasketballassociation |