Choosing the Precision of Performance Metrics
研究薪酬合同中激励与保险的权衡如何影响公司绩效测量的精确度，发现当结果受偶然因素影响大时测量精确度降低，且精确度通过流通股数量决定，对股价和现金流有启示。
There is a standard trade-off in compensation contracts between the provision of incentives and insurance. We hypothesize that this trade-off influences the precision with which firm performance is measured. We find that firm outcomes are measured less precisely when chance plays a large role in these outcomes. Further, this precision is determined through the choice of shares outstanding. This has several novel implications. Nominal stock prices can remain constant over time, and firms with unpredictable cash flows should have more shares and lower stock price levels, all else equal. We find evidence consistent with these implications.