Providing Learning Incentives and the Use of a Multi-Purpose Performance Measure

20 Pages Posted: 16 Apr 2014 Last revised: 26 Apr 2014

See all articles by Yasuhiro Mazda

Yasuhiro Mazda

Tohoku University - Graduate School of Economics & Management

Date Written: October 19, 2013

Abstract

This paper analyses the role of leading indicators that provide a firm manager with learning incentives of firm-specific skills. The effectiveness of leading indicators varies with contract scheme hired between the firm owner and the firm manager. I show that the leading indicator complements the outcome’s role of incentive provision at the sacrifice of information rent caused by the information asymmetry regarding manager’s learning capacity.

Keywords: Informativeness; Leading Indicators; Learning effort; Moral hazard; Short-term contracts

JEL Classification: D82, J41, M40

Suggested Citation

Mazda, Yasuhiro, Providing Learning Incentives and the Use of a Multi-Purpose Performance Measure (October 19, 2013). Available at SSRN: https://ssrn.com/abstract=2425448 or http://dx.doi.org/10.2139/ssrn.2425448

Yasuhiro Mazda (Contact Author)

Tohoku University - Graduate School of Economics & Management ( email )

Kawauchi, Aoba-ku
Sendai, 980-8576
Japan

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