This paper provides a formal analysis on how to design accrual based incentive systems so that a manager's and owner's interests are properly aligned. We introduce a general framework to summarize the literature, provide various extensions to it, and point to some of its limitations. We...

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...