Testing for Distortions in Performance Measures : An Application to Residual Income Based Measures like Economic Value Added

  • van Praag
  • Published 2014
Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be dysfunctional (gaming). This paper applies the empirical test developed by Courty and Marschke (2008) to detect whether the widely used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted… CONTINUE READING