Relative Performance Evaluation and Strategic Differentiation
研究了相对绩效评估（RPE）如何影响CEO的战略差异化决策，发现RPE会促使CEO减少战略差异化、提高与同行企业回报的相关性，这对理解董事会为何不完全剔除同行绩效有启示。
ABSTRACT I predict that relative performance evaluation (RPE) CEOs avoid strategic differentiation and increase the correlation of their firms’ returns with that of their peers. This prediction follows from a moral hazard model integrating strategic differentiation decisions: Differentiation enhances performance but exposes firms to risks not shared with peers, and the weakening RPE’s risk-shielding effect. Consistent with my prediction, I find evidence that changes in peer-group correlation are higher for RPE than non-RPE firms. This effect is more pronounced if benefits from differentiation are low, RPE benchmarks are industry specific, or RPE grants are large. Additional analyses provide direct evidence that RPE CEOs differentiate strategies less from industry-common strategies than non-RPE CEOs. To address endogeneity concerns, I present a two-stage least-squares approach exploiting variance in RPE usage induced by compensation consultants’ distinct styles. My analyses suggest strategic differentiation decisions to help explain why many boards do not completely filter peer performance from CEO compensation. Data Availability: All data are obtained from commercially available databases, including Compustat, CRSP, Execucomp, I/B/E/S, and ISS Incentive Lab. JEL Classifications: M12; M21; M41; M52.