Article Abstract:
The use of individual performance evaluation in the annual incentive plans of CEOs is examined. Individual performance evaluation can involve discretion, subjectivity and both financial and non-financial performance criteria. An agency theory-based prediction points to an increase in individual performance evaluation along with the importance of growth opportunities relative to assets in place, length of product development and product life cycles, and noise in traditional financial measures. Use of proprietary compensation data shows individual performance evaluation to increase along with growth opportunities and product time horizon.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
Robert M. Bushman and Abbie J. Smith focus their governance research on the role of financial accounting data in managerial incentive contracts and on cross-country differences in financial reporting and governance processes. This is valuable work, but there are some limitations, including the fact that a macro-level assessment of the role of accounting information is made.
User Contributions:
Comment about this article or add new information about this topic:
Article Abstract:
Research into the role of publicly reported financial accounting data in the governance procedures of companies is presented. It is suggested that the literature gives mixed views about the risk-incentives tradeoff indicated by the classic principal-agent model. This implies that empirical researchers should look at other theoretical structures.
User Contributions:
Comment about this article or add new information about this topic: