Publicizing Performance

42 Pages Posted: 18 Mar 2010 Last revised: 22 Sep 2012

See all articles by Günter Strobl

Günter Strobl

University of Vienna - Department of Finance

Edward Dickersin Van Wesep

University of Colorado at Boulder - Department of Finance

Date Written: March 15, 2012

Abstract

In most employment relationships, the employee's performance at the firm is privately, not publicly, observed. Firms can reward successful employees by publicizing their abilities, for example via a job title, a glowing letter of recommendation, or a resume-worthy award. Firms that establish reputations for hiring young workers and promoting those who succeed lose good workers to competitors, but can pay less to young, inexperienced workers in exchange. We find in a general equilibrium setting that firms with reputations for publicizing performance are able to pay less to employees at every level of tenure and thus earn economic profit, but that these firms will never be the most productive in the economy. In order for such equilibria to exist, the worker-firm match must be important, suggesting that this practice takes place only in human-capital intensive industries.

Suggested Citation

Strobl, Günter and Van Wesep, Edward Dickersin, Publicizing Performance (March 15, 2012). Available at SSRN: https://ssrn.com/abstract=1571848 or http://dx.doi.org/10.2139/ssrn.1571848

Günter Strobl (Contact Author)

University of Vienna - Department of Finance ( email )

Oskar-Morgenstern-Platz 1
Vienna, 1090
Austria

Edward Dickersin Van Wesep

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
73
Abstract Views
962
Rank
578,241
PlumX Metrics