Theoretical approaches to the formation of compensation

Document Type : Review Paper

Authors

1 دکترای گروه حسابداری، واحد هشترود،دانشگاه آزاد اسلامی، هشترود، ایران

2 دانشیار حسابداری دانشگاه شهید چمران اهواز

Abstract

Incentive programs in compensation form are for mutual interests and aligns the interest’s managers with shareholders. Designing and implementing an incentive program in right way, requires sufficient knowledge of theory and theoretical perspectives in the area of incentive plans and executives’ compensation. So motivational programs without theoretical backing or without consistent with the theoretical foundations, necessarily will not be lead to reduction of agency problems and therefore will not motivate to maximize corporate value and the interests of all stakeholder groups. In other words, with knowledge of the theoretical foundations of executive’s motivation, can help researchers and standard setter’s that answer to questions about the following; how much compensation should be paid to managers? How should rewards be paid? And a rewards program or contract how are influenced by social beliefs? In this article theoretical approaches in design the executive compensation has been introduced in form of three approaches, value approach, agency approach and symbolic approach.

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References

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History

  • Receive Date: 05 December 2016
  • Revise Date: 03 October 2018
  • Accept Date: 18 March 2017

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