Despite the importance of target setting for firms, prior research offers mixed evidence regarding performance consequences of target difficulty levels. While experimental research suggests that setting difficult targets can increase performance, empirical evidence in field studies is mixed and...

This study uses an experiment to investigate the effects of subjective performance evaluation in settings with multiple effort dimensions and their employee- and manager-related drivers. In contrast to its positive effects when effort provision is unidimensional, prior work has provided evidence...

This paper analyzes theoretically the effect of stock and stock options on the investment behavior of managers. Recent theoretical results state that stock options are an inefficient means of motivating managerial effort. But if the manager holds restricted stock and is allowed to invest his...

Executive Stock Option Programs (SOPs) have become the dominantcompensation instrument for top-management in recent years. Theincentive effects of an SOP both with respect to corporateinvestment and financing decisions critically depend on the design of the SOP. A specific problem in designing...