search query: @indexterm INCENTIVES / total: 682
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| Author: | Albuquerque, A. |
| Title: | Peer firms in relative performance evaluation |
| Journal: | Journal of Accounting & Economics
2009 : OCT, VOL. 48:1, p. 69-89 |
| Index terms: | compensation performance appraisal chief executive officers incentives |
| Language: | eng |
| Abstract: | Relative performance evaluation (hereafter as: RPE) in chief executive officer (hereafter as: CEO) compensation provides insurance against external shocks, yielding a more informative measure of CEO actions. This study argues that empirical evidence on the use of RPE is mixed since previous studies rely on a misspecified peer group. External shocks and flexibility in responding to the shocks are functions of, e.g. the firm's technology, the complexity of the organization, and the ability to access external credit, depending on the firm size. Evidence is consistent with the use of RPE in CEO compensation when peers are composed of similar industry-size firms. |
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