This study examines the determinants of performance measurement tailoring between top management and middle managers in compensation contracts. Theoretically, while tailoring potentially enhances the informativeness of performance measures for top management and middle managers respectively, it...

We propose managerial overconfidence as a behavioral explanation for SG&A cost stickiness. Building on the psychology literature, we predict that overconfident managers are more likely to overestimate future demand and therefore less likely to cut SG&A costs when sales decline. Using a sample of...

Using a large sample of U.S. firms, we provide evidence on the interplay between CEO overconfidence and CFO overconfidence on cost behavior in the setting of cost stickiness. We predict that overconfident CEOs or CFOs overestimate future demand, which makes them more likely to keep excess...