Following a similar idea, Canarella and Nourayi (2008) utilize the
sign of performance measures and apply the GMM estimation to test
the asymmetric incentive effect in total and cash compensation. They
find a non-linear and asymmetric relationship between executive compensation
and firm performance, and that the non-linearity and asymmetry
depends on the measures of firm performance. Convexity
characterizes the asymmetry of the relationship between executive com-
pensation and market returns, while concavity distinguishes the asymmetry
of the relationship between executive compensation and
accounting returns.