Using the data of the firms listed in Shenzhen and Shanghai Security Exchange, we conduct empirical analysis toward the following two topics:whether the relative performance evaluation effect exists in Chinese public firms and, how the market force influence the application of relative performance evaluation in public firms. We find that (a) the relative performance evaluation effect does exist in Chinese public firms, (b) the market force do enhance the relative performance evaluation effect in that firms. Besides, we conduct extended empirical analysis and find that the impact of market force toward the relative performance evaluation effect was neutralized in the state-owned firms controlled by the central government and was recognized in the state-owned firms controlled by the local government when choosing the firms in the same province as counterpart. |