Incentives and Promotions

The 24th online public lecture the Indiana University - ECGI Online Series was given by Kelly Shue of Yale University on the topic, “Incentives and Promotions”.

What challenges do boards face when trying to attract, retain, and promote top managerial talent? Why are fewer women promoted to senior positions than men? And why are some bosses so incompetent? This session discussed research on the Peter Principle, which says that hierarchical organizations suffer because effective workers are promoted until they reach their “level of incompetence.” It also discussed how forecasts of a worker’s management potential can help resolve the Peter Principle problem while also creating the unintended consequence of holding women back from management positions.

Professor Kelly Shue's academic interests lie at the intersection of behavioral economics and empirical corporate finance. Her research has explored the Peter Principle, compensation and promotions, gender and negotiations, the gambler's fallacy, contrast effects and non-proportional thinking in asset pricing, and executive social networks. Her research has been featured in numerous news outlets including CNN, NPR, and the Wall Street Journal, and has been awarded the AQR Insight Award, the Wharton School-WRDS Award for Best Empirical Finance Paper, and the UBS Global Asset Management Award for Research in Investments. She serves as an associate editor at the Journal of Finance and Journal of Financial Economics, and previously served as an editor at the Review of Finance. Before joining Yale, Professor Shue taught MBA Corporate Finance at the University of Chicago, Booth School of Business.

The public lecture series was organised by Institute for Corporate Governance (ICG) in partnership with the Ostrom Workshop at Indiana University and ECGI.