Peer-Specific Knowledge and Peer Group Properties in Relative Performance Evaluation

IF 1.4 Q3 BUSINESS, FINANCE

Journal of Management Accounting Research Pub Date : 2023-10-01 DOI:10.2308/jmar-2022-013

Chung-Yu Hung, Zhenyang Shi

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引用次数: 0

Abstract

ABSTRACT Although relative performance evaluation (RPE) represents an important compensation practice, selecting a relevant peer firm poses a challenge for compensation committees. We study the implications of a committee’s peer-specific knowledge for the peer group property (i.e., RPE relevance). Committees likely know more about firms within their networks, and such peer-specific knowledge increases with their connections to potential peer firms. Our findings suggest that peer-specific knowledge facilitates not only the inclusion of more relevant peer firms, but also the exclusion of less relevant ones. Moreover, the committees incorporate connected peers’ performance information to a greater extent for risk removal. We address identification challenges by including an intensive set of fixed effects to control for characteristics of the focal and the peer firms and by exploiting exogenous changes to the connections between the committees and the peer firms. Our findings suggest that the compensation committee’s peer-specific knowledge facilitates the RPE practice. Data Availability: All data used in this study are publicly available. JEL Classifications: D22; M52; I19.

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相对绩效评价中的同伴特异性知识与同伴群体属性

尽管相对绩效评估(RPE)是一种重要的薪酬实践，但选择相关的同行公司对薪酬委员会构成了挑战。我们研究了委员会的同行特定知识对同行群体属性(即RPE相关性)的影响。委员会可能对其网络中的公司有更多的了解，而这种特定于同行的知识随着他们与潜在同行公司的联系而增加。我们的研究结果表明，同行特异性知识不仅有助于纳入更多相关的同行企业，而且有助于排除不相关的同行企业。此外，委员会在更大程度上纳入了相关同行的绩效信息，以消除风险。我们通过包括一套密集的固定效应来控制焦点公司和同行公司的特征，并通过利用委员会和同行公司之间联系的外生变化来解决识别挑战。我们的研究结果表明，薪酬委员会的同行特异性知识促进了RPE实践。数据可用性:本研究中使用的所有数据都是公开的。JEL分类:D22;M52;I19。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Management Accounting Research BUSINESS, FINANCE-

CiteScore

2.90

自引率

5.90%

发文量

期刊介绍： The mission of the Journal of Management Accounting Research (JMAR) is to advance the theory and practice of management accounting through publication of high-quality applied and theoretical research, using any well-executed research method. JMAR serves the global community of scholars and practitioners whose work impacts or is informed by the role that accounting information plays in decision-making and performance measurement within organizations. Settings may include profit and not-for profit organizations, service, retail and manufacturing organizations and domestic, foreign, and multinational firms. JMAR furthermore seeks to advance an understanding of management accounting in its broader context, such as issues related to the interface between internal and external reporting or taxation. New theories, topical areas, and research methods, as well as original research with novel implications to improve practice and disseminate the best managerial accounting practices are encouraged.