An Investigation Into Religious Peer Effects

The communal nature of religion suggests peer effects exist in religiosity, potentially through positive spillovers in religious participation and social formation of religious beliefs. Using seven measures of religiosity, we estimate positive and negative peer effects in each case using peer group composition. We use a simultaneous equation model to account for self-selection into religious peer groups, and while we find positive peer effects are insignificant, there are significant negative peer effects operating through non-religious friends. This suggests peers affect social formation of religious beliefs, rather than through positive spillovers in religious participation.

Relative Performance Evaluation and Related Peer Groups in Executive Compensation Contracts

ABSTRACT: This study examines the explicit use of relative performance evaluation (RPE) in executive compensation contracts and the selection of RPE peers. Using S&P 1500 firms’ first proxy disclosures under the SEC’s 2006 executive compensation disclosure rules, we find that about 25 percent of our sample firms explicitly use RPE in setting executive compensation. We demonstrate that a lack of knowledge of both actual peer-group composition and the link between RPE-based performance targets and future peer performance significantly hinder the traditional implicit test from detecting RPE use. We also find that firms consider both costs and benefits of RPE as an incentive mechanism when deciding to use RPE. Finally, both efficient contracting and rent extraction considerations influence RPE peer selection, with the relative importance of these competing considerations depending on RPE firms’ performance.