We model relative performance evaluation (RPE) when a Chief Executive Officer (CEO) has the power to opportunistically influence the design of RPE by choosing the weight on an index-based peer group or by customizing the selection of peers comprising a peer group. A powerful CEO compares the...

In the empirical estimation of the relation between CEO pay and both firm and peer performance, researchers typically include conventional accounting-based measures that reflect firm performance net of executive pay expense. We analytically show that when firms evaluate CEO performance relative...

In tests of the relative performance evaluation (RPE) hypothesis, researchers rarely, if ever, aggregate peer performance in the same way as a firm’s board of directors. Framed as a standard errors-in-variables problem, a commonly-held view is that such aggregation errors induce an attenuation...