Relative peer quality and firm performance

• 成果类型: Article
• 署名作者: Francis, Bill; Hasan, Iftekhar; Mani, Sureshbabu; Ye, Pengfei
• 署名单位: Rensselaer Polytechnic Institute; Fordham University; Virginia Polytechnic Institute & State University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.06.002
• 发表日期: 2016
• 页码: 196-219
• 关键词: Relative peer quality; firm performance; tournament; optimal contract

摘要

We examine the performance impact of the relative quality of a Chief Executive Officer (CEO)'s compensation peers (peers to determine a CEO's overall compensation) and bonus peers (peers to determine a CEO's relative-performance-based bonus). We use the fraction of peers with greater managerial ability scores (Demerjian, Lev, and McVay, 2012) than the reporting firm to measure this CEO's relative peer quality (RPQ). We find that firms with higher RPQ earn higher stock returns and experience higher profitability growth than firms with lower RPQ Learning among peers and the increased incentive to work harder induced by the peer-based tournament contribute to RPQs performance effect. (C) 2016 Elsevier B.V. All rights reserved.