Peer firms in relative performance evaluation

Ana Albuquerque*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

129 Citations (Scopus)

Abstract

Relative performance evaluation (RPE) in chief executive officer (CEO) compensation provides insurance against external shocks and yields a more informative measure of CEO actions. I argue that empirical evidence on the use of RPE is mixed because previous studies rely on a misspecified peer group. External shocks and flexibility in responding to the shocks are functions of, for example, the firm's technology, the complexity of the organization, and the ability to access external credit, which depend on firm size. When peers are composed of similar industry-size firms, evidence is consistent with the use of RPE in CEO compensation.
Original languageEnglish
Pages (from-to)69-89
Number of pages21
JournalJournal of Accounting and Economics
Volume48
Issue number1
DOIs
Publication statusPublished - Oct 2009
Externally publishedYes

Keywords

  • CEO compensation
  • Peer group
  • Relative performance evaluation

Fingerprint

Dive into the research topics of 'Peer firms in relative performance evaluation'. Together they form a unique fingerprint.

Cite this