We develop a measurement-error framework for assessing the quality of relative-performance metrics designed to filter … out the systematic component of performance, and analyze relative total shareholder return (rTSR)-the predominant metric … market participants use to isolate managers' idiosyncratic performance-chosen by boards to evaluate managers. Among firms …

We compare evaluations of employee performance by individuals and groups of supervisors, analyzing a formal model and …-rater evaluations if groups rationally aggregate their signals about employee performance. Our controlled laboratory experiment confirms … performance. …

.<P> Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be … used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted, leading to … and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance measure that elicits …

recommendations for fixing them. We focus on choosing the right performance measure, determining how performance thresholds, targets …, or benchmarks are set, and defining the pay-performance relation and how the relation changes over time. Finally we … examine the role of banking bonuses in the recent financial crisis. While cultural and performance measurement issues …

Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts … noise and distortion of a performance measure can be measured. Courty and Marschke (2007) have recently developed an elegant … empirical test to detect distortion, based on the degradation of a performance measure subsequent to increasing its weight in …

Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts … noise and distortion of a performance measure can be measured. Courty and Marschke (2007) have recently developed an elegant … empirical test to detect distortion, based on the degradation of a performance measure subsequent to increasing its weight in …

the performance measure and its similarity (congruity, congruence) to the benefit of the manager's employer. A necessary …