The DOI matches its Crossref record; 1 of the 1 references it cites were found in a registry or an index.
Implicit Contracts and the Explanatory Power of Top Executive Compensation for Future Performance
Open accessAbstract
Work in economics on implicit contracts suggests that employment contracts may be based on performance measures that are observable only to the parties of the contract. We derive implications of this insight for the relationship between executive compensation and future firm performance. If firms are optimally using both observable and unobservable (to the researcher) measures of performance and the unobservable measures of performance are correlated with future observable measures of performance, then variation in current compensation that is not explained by variation in current observable performance measures should predict future variation in observable performance measures. Further, compensation should be more positively associated with future earnings when observable measures of performance are noisier and hence less useful for contracting. We test these assertions using panel data on executive compensation and show that (1) unexplained variation in current compensation is related to future performance, and (2) variation in compensation is more positively related to future performance when the variances of the firm's market and accounting returns are higher.
Overview
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Verification
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Citations
Cites
The Provision of Incentives in Firms
Prendergast, C. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.1.7 · Cited by 3,338
Cited by
The Provision of Incentives in Firms
Prendergast, C. (1999) · Journal of Economic Literature · doi:10.1257/jel.37.1.7 · Cited by 3,338
Financial accounting information, organizational complexity and corporate governance systems
Bushman, R., Chen, Q., Engel, E., & Smith, A. (2004) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2003.09.005 · Cited by 1,059
Financial Accounting Information and Corporate Governance
Bushman, R. M., & Smith, A. J. (2002) · SSRN Electronic Journal · doi:10.2139/ssrn.253302 · Cited by 849
Determinants and Effects of Subjectivity in Incentives
Gibbs, M., Merchant, K. A., Stede, W. A. V. D., & Vargus, M. E. (2004) · The Accounting Review · doi:10.2308/accr.2004.79.2.409 · Cited by 486
Corporate Board Governance and Voluntary Disclosure of Executive Compensation Practices*
Laksmana, I. (2008) · Contemporary Accounting Research · doi:10.1506/car.25.4.8 · Cited by 409
Metadata
- Authors
- Hayes, R. M., & Schaefer, S.
- Venue
- The RAND Journal of Economics
- Publisher
- Wiley
- Published
- 2000
- Volume
- 31
- Issue
- 2
- Pages
- 273
- ISSN
- 0741-6261 (ISSN-L)
- OpenAlex
- W3122985942
- Cited by
- 250
- References
- 1
- FWCI
- 33.41
- Type
- journal article
- Language
- en
- Open access
- green
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
How to cite
Cite CoChat for the checks on this page, and the paper for its own findings.
- This page
- CoChat. (2026). Citation check: Implicit Contracts and the Explanatory Power of Top Executive Compensation for Future Performance. https://app.cochat.ai/papers/10.2307/2601041
- The paper
- Hayes, R. M., & Schaefer, S. (2000). Implicit Contracts and the Explanatory Power of Top Executive Compensation for Future Performance. The RAND Journal of Economics. https://doi.org/10.2307/2601041
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
