Optimal choice of relative performance indicator and product market competition

Jumpei Hamamura and Sho Hayakawa

Economics and Business Letters, 2024, vol. 13, issue 3, 112-121

Abstract: We explore what performance indicator is optimal in a market competition, when firm’s owner pays compensation based on relative performance evaluation (RPE) to CEOs. Comparing the firm’s own profit with competitor’s profit, prior studies examine the RPEs. However, in RPE practices, other performance indicator is often adopted as a performance indicator with the exception of profit. Based on this motivation, from our analysis, we demonstrate that owners adopt sales as a relative performance indicator to evaluate CEO’s performance in specific economic conditions. This result has following contributions to RPE studies. First, our result will establish the future research avenue about choice of relative performance indicator. Second, our study has an important implication to empirical RPE research.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://reunido.uniovi.es/index.php/EBL/article/view/20501 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ove:journl:aid:20501

Access Statistics for this article

Economics and Business Letters is currently edited by Francisco J. Delgado

More articles in Economics and Business Letters from Oviedo University Press Contact information at EDIRC.
Bibliographic data for series maintained by Francisco J. Delgado ().