Finding an incentive system that optimally controls managerial effort and improves firm performance is an evergreen issue in both research and practice. Corporate governance recommendations and practical implementations aim at preventing short termism and promoting broad yet individual effort assessment. Nevertheless, their benefits are less clear and might reverse in reality. This paper presents comprehensive evidence for the interference of short- and long-term performance measures based on panel data from German public companies’ remuneration reports. The findings show that short-term orientation is not necessarily harmful, but individually negotiated goals can encourage managerial selfishness to the detriment of the firm.
|Publication status||Published - 2021|