SECTORIAL ANALYSIS OF PERFORMANCE MEASUREMENTS USED IN THE MANAGERIAL REMUNERATION CONTRACTS

Abstract

The objective of this paper is to verify if there is variability in the accounting indicators (Gross Margin, EBIT Margin, Operating Margin, Net Margin, EBITDA Margin, Return on Assets and Return on equity) which are used as measures of performance in any variable remuneration of managers. The measures of performance are strategically used in the companies with the objective of lining up the interests of managers and shareholders, in order to guarantee the desired returns. That is, amongst the alternatives to guarantee the attainment of sustainable competitive advantage, through the managers actions, the organizations institute performance contracts, linked to the accounting, economic and financial indexes. The contracts firmed between managers and companies have as objective to assure the levels of desired yield and the continuity of the businesses. Therefore, through an exploratory research, the behavior of the performance indexes used by the companies analyzed in 17 Brazilian economic sectors. In the period of 1998 the 2005, all the companies which had stocks negotiated in the São Paulo Stock Exchange (BOVESPA) were analyzed. The analysis was based on the Structure, Conduct and Performance paradigm which anticipates that the market structure has influence on the behavior and performance of the companies. The found results suggest that, just in some specific sectors, the performance indexes can be used as parameters of managers’ remuneration.