Relative Performance Evaluation and Competitive Aggressiveness

C. Feichter*, F. Moers, O. Timmermans

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


We examine the relation between incentive plans based on relative performance and competitive aggressiveness. Using data on executive incentive-compensation contracts in large U.S. firms, we find a positive association between competitive aggressiveness and peer group overlap-that is, the extent to which two firms select each other as peers in these incentive plans. Our findings indicate that managers of such firms take more frequent as well as more complex competitive actions, relative to managers evaluated on relative performance without peer group overlap. Moreover, we show that these competitive tactics are more pronounced when managers compete against: (1) peers with similar grant sizes, (2) peers on similar performance metrics, and (3) peers in the same industry. Collectively, our findings provide evidence on how widely used incentive-compensation practices relate to strategic firm decisions.
Original languageEnglish
Pages (from-to)1859-1913
Number of pages55
JournalJournal of Accounting Research
Issue number5
Early online date9 May 2022
Publication statusPublished - Dec 2022


  • relative performance evaluation
  • peer group overlap
  • competitive aggressiveness
  • strategic interaction
  • collusion


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