Influence of managerial incentives: A study of their predictive power on firm development of industrial sector of publicly listed companies

• Main Authors: Cheng, Edith T., Gatchalian, Joyce B., Po, Almira R., Sze, Deborrah C.
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Incentives in industry; Corporations > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14720
• Institution: De La Salle University

Managerial incentives play a big role in large companies composed of diverse employees. It first came about as an answer to many problems such as agency problems. As the start of modernization occurred, labor became significantly different. Jobs became highly automated and, thus, increased the possibility for mass production. Although machineries allowed for easier production, empirical studies show that human capital is still of the essence especially, since it greatly influences product quality. Now, incentives not only play the role of a solution for pressing employee problems but, also, serve as a strategically designed method of increasing employee satisfaction thus, increasing productivity and firm development. This study focuses on how employee satisfaction caused by such incentives lead to firm development. Due to the broad connotation of the term firm development, the researchers provided for a separate definition. This definition is centered on being able to measure firm development in terms of amounts reflected in the financial statements. Using key factors such as net income, operating revenue, employee retention rate, market share and total assets, the researchers found out that there is significant effect between managerial incentives and, total assets, net income and operating revenue respectively. Moreover, the researchers found out that incentives did not have any significant impact on employee retention rate and market share. The firm development indicators used were gathered from financial statements of randomly selected companies included in the industrial sector of publicly listed companies in the Philippine stock exchange for the years 2006-2010.