Layered asymmetrically clipped optical orthogonal frequency division multiplexing (LACO-OFDM) has been proposed for improving the spectral efficiency of conventional asymmetrically clipped optical OFDM. Multiple base layers that are orthogonal in the frequency domain are sequentially superimposed to form LACO-OFDM, where each superimposed layer fills the empty subcarriers left by the previous layer. As our contribution, the bit error ratio (BER) considering the effect of thermal noise, clipping distortion, inter-layer interference, and the bit rate difference between layers is analysed in this paper. Since the BER performance of LACO-OFDM is closely related to its peak-to-average power ratio (PAPR) distribution, we also provide the analytical expression of the PAPR distribution in this paper, which quantifies how the number of layers in LACO-OFDM reduces the PAPR. As a further advance, we propose a tone-injection aided PAPR reduction design for LACO-OFDM, which in turn improves the BER performance. Simulations are provided for verifying both the analytical BER performance and the PAPR distribution of LACO-OFDM. The results show that the expressions derived match well with the simulations. Furthermore, the PAPR reduction method proposed attains a 5 dB PAPR reduction at the $10^{-3}$ probability-point of the complementary cumulative distribution function, as well as a better BER performance than the original LACO-OFDM scheme.
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