To address agents' moral hazard over effort, incentive contracts impose risk on the agents. As performance measures become noisier, the conventional agency analysis predicts that principals will reduce the incentive weights assigned to such measures. However, prior empirical results (Prendergast...

The extant literature on family-controlled firms in the U.S. presents a mixed picture on how family control affects opacity and value creation. In this study, we show that the mixed results arise from the differences among family firms with regard to the presence of founders and the extent of...

We examine a principal-agent setting in which the principal uses a performance measurement system for multiple purposes to provide incentives and for retention decisions. The principal chooses the nature and extent of bias in the system, which determines whether the performance report is...

Screening talent to appropriately assign tasks among agents is an important organizational decision. In this paper, we compare the efficacies of absolute and relative performance evaluation systems in identifying agent talent when information asymmetry is present. We identify conditions under...