Limits to Relative Performance Evaluation

Limits to Relative Performance Evaluation
Author: Office of Office of the Comptroller of the Currency
Publisher: CreateSpace
Total Pages: 36
Release: 2015-01-01
Genre:
ISBN: 9781505310177

This paper revisits the topic of relative performance evaluation (RPE) of top management using a large panel of community banks. We show that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. Our empirical results indicate that weak downturn-linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in better-governed banks, which are more likely to engage in value-enhancing disciplinary actions. Our analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality.

Optimal Dynamic Relative Performance Evaluation

Optimal Dynamic Relative Performance Evaluation
Author: Thomas Hemmer
Publisher:
Total Pages: 28
Release: 2017
Genre:
ISBN:

The theoretical prediction of a negative coefficient on positively correlated peer performance underlies much of the empirical literature on relative performance evaluation. This prediction is commonly obtained from the special case of a single period setting where the variance-covariance matrix of the available performance measures is exogenously restricted to be independent of the evaluee's action. Using the dynamic approach of Holmström and Milgrom (1987), I study the properties of contracts that optimally condition an agent's compensation both on his own performance and on how well he fares relative to a peer (group) when these restrictions are not imposed. I show that if the covariance is non-zero, the optimal contract is linear in own and peer performance as well as the correlation between own and peer performance. In contrast, and in line with the preponderance of the empirical evidence, in its simplest form the model predicts that the expected coefficient on peer performance is exactly zero.

Explaining Executive Pay

Explaining Executive Pay
Author: Lukas Hengartner
Publisher: Springer Science & Business Media
Total Pages: 224
Release: 2007-12-31
Genre: Business & Economics
ISBN: 3835093916

Lukas Hengartner shows that both firm complexity and managerial power are associated with higher pay levels. This suggests that top managers are paid for the complexity of their job and that more powerful top managers receive pay in excess of the level that would be optimal for shareholders.

Performance Evaluation and Benchmarking of Intelligent Systems

Performance Evaluation and Benchmarking of Intelligent Systems
Author: Raj Madhavan
Publisher: Springer Science & Business Media
Total Pages: 351
Release: 2010-04-29
Genre: Computers
ISBN: 144190493X

To design and develop capable, dependable, and affordable intelligent systems, their performance must be measurable. Scienti?c methodologies for standardization and benchmarking are crucial for quantitatively evaluating the performance of eme- ing robotic and intelligent systems’ technologies. There is currently no accepted standard for quantitatively measuring the performance of these systems against user-de?ned requirements; and furthermore, there is no consensus on what obj- tive evaluation procedures need to be followed to understand the performance of these systems. The lack of reproducible and repeatable test methods has precluded researchers working towards a common goal from exchanging and communic- ing results, inter-comparing system performance, and leveraging previous work that could otherwise avoid duplication and expedite technology transfer. Currently, this lack of cohesion in the community hinders progress in many domains, such as m- ufacturing, service, healthcare, and security. By providing the research community with access to standardized tools, reference data sets, and open source libraries of solutions, researchers and consumers will be able to evaluate the cost and be- ?ts associated with intelligent systems and associated technologies. In this vein, the edited book volume addresses performance evaluation and metrics for intel- gent systems, in general, while emphasizing the need and solutions for standardized methods. To the knowledge of the editors, there is not a single book on the market that is solely dedicated to the subject of performance evaluation and benchmarking of intelligent systems.