Statistical Model and Empirical Evidence
Building on the theoretical insights of the second chapter and their application to firm performance measures in the third chapter, this chapter examines the empirical evidence for the hypothesis that the value of firm performance measures results from the reduction of misallocation costs. Empirically, firm performance pay should be high whenever task descriptors indicate high distortion costs.
KeywordsFirm Performance Incentive Scheme Incentive Effect Unobserved Component Relative Performance Evaluation
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