{"title":"The interaction of subjective and objective performance information in fixed payment schemes","authors":"Jörg Budde","doi":"10.1016/j.mar.2023.100853","DOIUrl":null,"url":null,"abstract":"<div><p>I analyse the use of fixed payment schemes when compensation for a group of agents may be based on both objective and subjective performance evaluations. Under purely subjective performance evaluation, the optimal compensation rule entails third-party payments if liability constrains contracting. Verifiable information can improve the contract even if it provides no additional information. For verifiable information to be valuable, unambiguous identification of good news is more important than identification of bad news. Third-party payments can be avoided if an objective measure unambiguously identifies good news. For a group of identical agents, the optimal fixed payment scheme is a tournament if the agents are risk neutral or are of decreasing strong absolute risk aversion.</p></div>","PeriodicalId":51429,"journal":{"name":"Management Accounting Research","volume":"61 ","pages":"Article 100853"},"PeriodicalIF":4.2000,"publicationDate":"2023-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Management Accounting Research","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1044500523000239","RegionNum":2,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
I analyse the use of fixed payment schemes when compensation for a group of agents may be based on both objective and subjective performance evaluations. Under purely subjective performance evaluation, the optimal compensation rule entails third-party payments if liability constrains contracting. Verifiable information can improve the contract even if it provides no additional information. For verifiable information to be valuable, unambiguous identification of good news is more important than identification of bad news. Third-party payments can be avoided if an objective measure unambiguously identifies good news. For a group of identical agents, the optimal fixed payment scheme is a tournament if the agents are risk neutral or are of decreasing strong absolute risk aversion.
期刊介绍：
Management Accounting Research aims to serve as a vehicle for publishing original research in the field of management accounting. Its contributions include case studies, field work, and other empirical research, analytical modelling, scholarly papers, distinguished review articles, comments, and notes. It provides an international forum for the dissemination of research, with papers written by prestigious international authors discussing and analysing management accounting in many different parts of the world.
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