Performance Measurement and Incentive Compensation: An Empirical Analysis and Comparison of Chinese and Western Firms’ Practices Kenneth A. Merchant University of Southern California Wim A. Van der Stede  London School of Economics Thomas W. Lin University of Southern California Zengbiao Yu Tsinghua University April 25, 2009 This paper has benefited from comments by Shannon Anderson, Margaret Christ, David Erkens, Matt Hall, Christo Karuna, Tatiana Sandino, and workshop participants at WU-Wien and the University of Auckland, and from the capable research assistance of Fei Du and Melissa Martin.  Corresponding author : Wim A. Van der Stede, Department of Accounting, London School of Economics, Houghton Street, London WC2A 2AE, U.K., tel. 020 7955 6695, w.van-der-stede@lse.ac.uk.