Competition and Ratchet Hypothesis: How Safe Are Manufacturing Companies in Sub-Saharan Africa?

Pengarang

  • Olusola Enitan Olowofela Department of Banking & Finance, OlabisiOnabanjo University, Ago-Iwoye, Ogun State, Nigeria
  • Akanbi M. A Tonade Department of Accounting, Crescent University Abeokuta, Ogun State, Nigeria

DOI:

https://doi.org/10.32890/mmj2021.25.3

Kata kunci:

Ratcheting hypothesis, ratchet effects, information asymmetry, ex-post competition, Sub-Saharan Africa

Abstrak

This study applied the conventional ratcheting notion that managers (agents) chose to restrict their performance because they anticipated that firms (principals) would respond to higher performance levels by raising targets or by cutting pay in a piece-rate labour environment. A cross-sectional panel model was developed to subject this baseline notion of ratcheting hypothesis to multi-period and ex-post competitive labour market environment, bearing in mind that there was information asymmetry to both parties. It was observed, as predicted by the theoretical model that there would be substantial ratchet effects in the absence of competition. However, when subjected to ex-post competition, the ratchet effects were reduced, regardless of whether market conditions favoured the firms or the managers and thereby making the manufacturing companies in Sub-Saharan Africa safer than when they were exposed to ratcheting in its conventional form.

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Biografi Pengarang

  • Akanbi M. A Tonade, Department of Accounting, Crescent University Abeokuta, Ogun State

    Department of Accounting

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Diterbitkan

2021-07-09

Terbitan

Jil. 25 (2021): Malaysian Management Journal (MMJ) Vol. 25, July 2021

Bahagian

Articles

Lesen

Hak Cipta (c) 2022 Malaysian Management Journal

Creative Commons License

Kerja ini dilesenkan di bawah Creative Commons Attribution 4.0 International License.

Cara Memetik

Olowofela, O. E., & Tonade, A. M. A. (2021). Competition and Ratchet Hypothesis: How Safe Are Manufacturing Companies in Sub-Saharan Africa? Malaysian Management Journal, 25, 49-72. https://doi.org/10.32890/mmj2021.25.3

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##plugins.generic.citations.panel.identifiers## DOI 10.32890/mmj2021.25.3 OpenAlex W3184695706 Semantic Scholar CorpusID 237908159