We collect detailed survey data on financial managers' annual bonus plans and extensively validate a measure of the willingness to engage in unethical behavior using a panel of 253 respondents. Our main finding suggests that incentives to meet financial targets are positively associated with...

Prior studies often examine the association between performance and various measures of incentive strength. We argue that target difficulty is another important but often overlooked driver of managerial performance. Using data on earnings targets in annual bonus plans, we construct and validate...