Relative performance evaluation, sabotage and collusion*

• 成果类型: Article
• 署名作者: Bloomfield, Matthew J.; Marvao, Catarina; Spagnolo, Giancarlo
• 署名单位: University of Pennsylvania; Stockholm School of Economics; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101608
• 发表日期: 2023
• 关键词: incentive contracts; moral hazard; COMPENSATION; COMPETITION; RISK; provision

摘要

We examine whether the potential for costly sabotage is a deterrent to firms' use of relative performance evaluation (RPE) in CEO pay plans. We exploit illegal cartel membership as a source of variation in the potential for costly sabotage and document that firms are more likely to use RPE if they are currently cartel members. Moreover, firms frequently drop RPE from their CEOs' pay plans immediately after their cartels are detected, dissolved and punished. We further provide suggestive evidence that the potential for costly sabotage explains these patterns; cartel membership severs the empirical association between RPE and competitive aggression.