Managers often face the choice between promoting an internal employee and hiring an external candidate. Using an incentivized experiment, we examine managers’ promote/hire decision and employees’ behavior before and after that decision in a setting in which the external candidate has superior ability. Consistent with theory on trust and reciprocity, results indicate that employees invest in costly effort to increase their chances of promotion, and managers reciprocate this effort by promoting them despite their inferior ability. Managers tend to anchor their promote/hire decision on employees’ early effort level rather than their sharp increase in effort immediately prior to that decision. Importantly, we predict and find that managers are more likely to promote internally rather than hire externally under a less precise performance measurement system. Results also suggest that promoted (non-promoted) employees who exerted high effort react more positively (negatively) to their managers’ promote/hire decision under a more precise system.
{"title":"Promote Internally or Hire Externally? The Role of Trust, Reciprocity, and Performance Measurement Precision","authors":"E. Chan, Jeremy B. Lill, V. S. Maas","doi":"10.2139/ssrn.3849098","DOIUrl":"https://doi.org/10.2139/ssrn.3849098","url":null,"abstract":"Managers often face the choice between promoting an internal employee and hiring an external candidate. Using an incentivized experiment, we examine managers’ promote/hire decision and employees’ behavior before and after that decision in a setting in which the external candidate has superior ability. Consistent with theory on trust and reciprocity, results indicate that employees invest in costly effort to increase their chances of promotion, and managers reciprocate this effort by promoting them despite their inferior ability. Managers tend to anchor their promote/hire decision on employees’ early effort level rather than their sharp increase in effort immediately prior to that decision. Importantly, we predict and find that managers are more likely to promote internally rather than hire externally under a less precise performance measurement system. Results also suggest that promoted (non-promoted) employees who exerted high effort react more positively (negatively) to their managers’ promote/hire decision under a more precise system.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127047205","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Theory suggests mandated changes in accounting standards can lead to increases in investment efficiency through two mechanisms: (1) increases in internal information quality (IIQ), or (2) reductions in information asymmetry with external parties. We use the long transition period of the new lease accounting standard to isolate the effects of increases in IIQ on investment efficiency. Using a difference-in-differences design we find that firms affected by the new lease standard experience significant increases in investment efficiency in the year immediately preceding the standards implementation. The improvements in investment efficiency are largest for firms with high lease intensity and multiple operating segments. The increases in investment efficiency are driven by over-investing firms that reduce their capital expenditures and net acquisitions. We contribute to the investment efficiency literature by identifying the effect of IIQ on investment behavior. Further, we document that internal information gathering in anticipation of a new accounting standard can improve managerial decision-making, an explicit goal of the FASB’s post-implementation review of the lease standard.
{"title":"You Don’t Know What You Don’t Know: Improvements in Investment Efficiency Prior to a Mandated Accounting Change","authors":"Derek Christensen, Dan Lynch, Clay Partridge","doi":"10.2139/ssrn.3825083","DOIUrl":"https://doi.org/10.2139/ssrn.3825083","url":null,"abstract":"Theory suggests mandated changes in accounting standards can lead to increases in investment efficiency through two mechanisms: (1) increases in internal information quality (IIQ), or (2) reductions in information asymmetry with external parties. We use the long transition period of the new lease accounting standard to isolate the effects of increases in IIQ on investment efficiency. Using a difference-in-differences design we find that firms affected by the new lease standard experience significant increases in investment efficiency in the year immediately preceding the standards implementation. The improvements in investment efficiency are largest for firms with high lease intensity and multiple operating segments. The increases in investment efficiency are driven by over-investing firms that reduce their capital expenditures and net acquisitions. We contribute to the investment efficiency literature by identifying the effect of IIQ on investment behavior. Further, we document that internal information gathering in anticipation of a new accounting standard can improve managerial decision-making, an explicit goal of the FASB’s post-implementation review of the lease standard.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130028377","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Management accounting and control system practices have changed dramatically throughout the last 200 years. All these changes were in response to rapid technological developments, environmental complexity, changes in organizational structures, managerial style, and many different changes that have emerged throughout the years. The main purpose of this paper is to synthesize the relevant literature to identify the current and future directions of management accounting and control systems practices. This was carried out by following an analytical approach, with the intention of reviewing the literature by emphasizing the developments of management accounting and control system practices throughout the twentieth and twenty- first centuries. Consequently, a conceptual framework that portray the current practices of management accounting was developed. As a result, insights for the future directions of this discipline were indicated. The findings of this study showed that the role and scope of management accounting has changed from cost determination, to creation of value to customers. Thus, the different modern techniques that have emerged in response to the needs of contemporary organizations are described. Furthermore, it articulated that today managerial accountants no longer use a historical view of strategy and operations, but look to predict what the market will do in the future. Consequently, it is anticipated that even the role, education, and practices of management accountants will continue to change in the future. Moving from scorekeeping, determining and allocating costs, to developing their predictive, prescriptive analytical skills. Therefore, it is recommended that more emphasis needs to be placed in developing their personal and technical skills, to obtain a better understanding of contemporary management accounting methods for better support of managerial decision- making.
{"title":"Analytical Review of the Current and Future Directions of Management Accounting and Control Systems","authors":"Dina Ahmed Mohamed Ghandour","doi":"10.2139/ssrn.3819654","DOIUrl":"https://doi.org/10.2139/ssrn.3819654","url":null,"abstract":"Management accounting and control system practices have changed dramatically throughout the last 200 years. All these changes were in response to rapid technological developments, environmental complexity, changes in organizational structures, managerial style, and many different changes that have emerged throughout the years. The main purpose of this paper is to synthesize the relevant literature to identify the current and future directions of management accounting and control systems practices. This was carried out by following an analytical approach, with the intention of reviewing the literature by emphasizing the developments of management accounting and control system practices throughout the twentieth and twenty- first centuries. Consequently, a conceptual framework that portray the current practices of management accounting was developed. As a result, insights for the future directions of this discipline were indicated. The findings of this study showed that the role and scope of management accounting has changed from cost determination, to creation of value to customers. Thus, the different modern techniques that have emerged in response to the needs of contemporary organizations are described. Furthermore, it articulated that today managerial accountants no longer use a historical view of strategy and operations, but look to predict what the market will do in the future. Consequently, it is anticipated that even the role, education, and practices of management accountants will continue to change in the future. Moving from scorekeeping, determining and allocating costs, to developing their predictive, prescriptive analytical skills. Therefore, it is recommended that more emphasis needs to be placed in developing their personal and technical skills, to obtain a better understanding of contemporary management accounting methods for better support of managerial decision- making.<br><br>","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122874238","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop three complementary tests to examine how adverse selection affects the design of executive compensation contracts: First, we show that externally-hired CEOs receive higher total pay and have fewer equity incentives relative to internally-promoted CEOs, consistent with their ability to extract larger information rents due to greater private information. These differences are more pronounced when less is known about the prospective CEO, but quickly dissipate over time. Second, we show that external CEOs’ initial contracts differ more from those of their firm’s incumbent senior managers than do those of internal CEOs—particularly in terms of accounting performance metrics and equity-based pay, in line with the use of these features to elicit private information. Third, we find that following an unanticipated change in option vesting schedules prompted by SFAS 123R, newly appointed executives do not increase their option exercises and share sales—despite their newfound ability to do so—while longer-tenured executives do, consistent with contracts initially being designed to screen for certain types of managers before shifting to encourage certain behaviors. Combined, our evidence supports the distinct role of adverse selection in the design of executive compensation contracts.
{"title":"Executive Compensation Contracts in the Presence of Adverse Selection","authors":"C. Armstrong, Luzi Hail, R. Zhang","doi":"10.2139/ssrn.3805082","DOIUrl":"https://doi.org/10.2139/ssrn.3805082","url":null,"abstract":"We develop three complementary tests to examine how adverse selection affects the design of executive compensation contracts: First, we show that externally-hired CEOs receive higher total pay and have fewer equity incentives relative to internally-promoted CEOs, consistent with their ability to extract larger information rents due to greater private information. These differences are more pronounced when less is known about the prospective CEO, but quickly dissipate over time. Second, we show that external CEOs’ initial contracts differ more from those of their firm’s incumbent senior managers than do those of internal CEOs—particularly in terms of accounting performance metrics and equity-based pay, in line with the use of these features to elicit private information. Third, we find that following an unanticipated change in option vesting schedules prompted by SFAS 123R, newly appointed executives do not increase their option exercises and share sales—despite their newfound ability to do so—while longer-tenured executives do, consistent with contracts initially being designed to screen for certain types of managers before shifting to encourage certain behaviors. Combined, our evidence supports the distinct role of adverse selection in the design of executive compensation contracts.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124259185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Vasilios-Christos Naoum, Georgios A. Papanastasopoulos, Panagiotis Selekos, Orestes Vlismas
This study provides international empirical evidence for the asymmetric cost behavior of the cost of goods sold and the operating expenses in the context of the European non-listed firms. We employ a data sample of 4,177,625 firm years observations from Amadeus Database for the period 2009-2017 to explore the asymmetric cost behavior phenomenon at the EU-28 countries pool and country level. Substantial variation in the direction of the asymmetric cost behavior, across countries and firm size clusters, is observed. However, in a considerable number of cases, the cost of goods sold and the operating expenses exhibit symmetric cost behavior. We conjecture that the reasons behind the observed pattern of asymmetric cost behavior in the organizational setting of non-listed firms are the relatively low availability of entrepreneurial economic resources and the presence of entrepreneurs which might affect the resource allocation decision-making process.
{"title":"Exploring the Asymmetric Cost Behavior in the Context of European Non-Listed Firms","authors":"Vasilios-Christos Naoum, Georgios A. Papanastasopoulos, Panagiotis Selekos, Orestes Vlismas","doi":"10.2139/ssrn.3800299","DOIUrl":"https://doi.org/10.2139/ssrn.3800299","url":null,"abstract":"This study provides international empirical evidence for the asymmetric cost behavior of the cost of goods sold and the operating expenses in the context of the European non-listed firms. We employ a data sample of 4,177,625 firm years observations from Amadeus Database for the period 2009-2017 to explore the asymmetric cost behavior phenomenon at the EU-28 countries pool and country level. Substantial variation in the direction of the asymmetric cost behavior, across countries and firm size clusters, is observed. However, in a considerable number of cases, the cost of goods sold and the operating expenses exhibit symmetric cost behavior. We conjecture that the reasons behind the observed pattern of asymmetric cost behavior in the organizational setting of non-listed firms are the relatively low availability of entrepreneurial economic resources and the presence of entrepreneurs which might affect the resource allocation decision-making process.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131276940","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To what extent do small businesses need to know about businesses taxes, accounting software and financial statements? Recent Australian research demonstrates that small business owners with a higher understanding of tax and accounting software are more likely to achieve a higher level of business income. This greater understanding may enable owners to better manage their cash flow and highlights the importance of improving owners understanding of business tax and accounting software.
{"title":"Small Business Performance Requires a Better Understanding of Tax and Accounting Software","authors":"Melissa Belle Isle, B. Freudenberg","doi":"10.2139/SSRN.3794879","DOIUrl":"https://doi.org/10.2139/SSRN.3794879","url":null,"abstract":"To what extent do small businesses need to know about businesses taxes, accounting software and financial statements? Recent Australian research demonstrates that small business owners with a higher understanding of tax and accounting software are more likely to achieve a higher level of business income. This greater understanding may enable owners to better manage their cash flow and highlights the importance of improving owners understanding of business tax and accounting software.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129912867","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes the risk-taking properties of long-term incentive plans based on relative performance. In stark contrast to traditional time-vested stock options, these incentive plans give undiversified, risk-averse managers an incentive to pursue projects characterized by idiosyncratic rather than systematic risk. My key prediction is that this effect manifests synergistically through two plan characteristics: payout convexity and peer group difficulty. I present empirical evidence consistent with this prediction. I further show that the choices for payout convexity and peer group difficulty are consistent with moral hazard considerations. Collectively, my study highlights several new dimensions to consider in assessing whether and how incentive-compensation contracts alter firms’ risk profiles.
{"title":"What are the Risk-Taking Properties of Long-Term Incentive Plans Based on Relative Performance?","authors":"Oscar Timmermans","doi":"10.2139/ssrn.3570875","DOIUrl":"https://doi.org/10.2139/ssrn.3570875","url":null,"abstract":"This paper analyzes the risk-taking properties of long-term incentive plans based on relative performance. In stark contrast to traditional time-vested stock options, these incentive plans give undiversified, risk-averse managers an incentive to pursue projects characterized by idiosyncratic rather than systematic risk. My key prediction is that this effect manifests synergistically through two plan characteristics: payout convexity and peer group difficulty. I present empirical evidence consistent with this prediction. I further show that the choices for payout convexity and peer group difficulty are consistent with moral hazard considerations. Collectively, my study highlights several new dimensions to consider in assessing whether and how incentive-compensation contracts alter firms’ risk profiles.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127096000","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Organizations have repeatedly faced challenges due to disasters such as pandemics, economic or financial crises, and other unexpected events. One reason why some organizations cope more efficiently than others with such unforeseen circumstances might be found in their resilience design. However, while this has long been the subject of research, there is still no consensus in the literature, and there is no common understanding regarding the definition of the term ‘resilience’, the conceptualizations at the organizational level, and its interaction with management control systems (MCS). This study bridges the MCS and organizational resilience literature and provides a broader understanding of the relationship between the organization and adverse events. To identify relationships between MCS and organizational resilience, we perform a systematic review of organizational resilience conceptualizations and definitions, supplemented by current empirical findings using a content analysis and a citation network analysis. We investigate different approaches to achieve organizational resilience objectives by using MCS (especially Simons’ levers of control framework) to show relationships, trade-offs, complementarities, and substitutes, and provide initial approaches for applying complementarity theory to explain the relationship between MCS design and use, and organizational resilience. We reveal gaps between organizational resilience and MCS literature, and provide avenues for future research, in particular a preliminary roadmap for empirical research. Our findings suggest that integrating organizational resilience measures into MCS might be beneficial for organizations to manage resilience at the organizational level and achieve complementary effects. In addition, organizations could increase their resilience capacity by building resilience-oriented management controls (ROMC).
{"title":"Bridging Organizational Resilience and Management Control Systems - A Systematic Review","authors":"M. Weber, P. Roetzel","doi":"10.2139/ssrn.3785416","DOIUrl":"https://doi.org/10.2139/ssrn.3785416","url":null,"abstract":"Organizations have repeatedly faced challenges due to disasters such as pandemics, economic or financial crises, and other unexpected events. One reason why some organizations cope more efficiently than others with such unforeseen circumstances might be found in their resilience design. However, while this has long been the subject of research, there is still no consensus in the literature, and there is no common understanding regarding the definition of the term ‘resilience’, the conceptualizations at the organizational level, and its interaction with management control systems (MCS). This study bridges the MCS and organizational resilience literature and provides a broader understanding of the relationship between the organization and adverse events. To identify relationships between MCS and organizational resilience, we perform a systematic review of organizational resilience conceptualizations and definitions, supplemented by current empirical findings using a content analysis and a citation network analysis. We investigate different approaches to achieve organizational resilience objectives by using MCS (especially Simons’ levers of control framework) to show relationships, trade-offs, complementarities, and substitutes, and provide initial approaches for applying complementarity theory to explain the relationship between MCS design and use, and organizational resilience. We reveal gaps between organizational resilience and MCS literature, and provide avenues for future research, in particular a preliminary roadmap for empirical research. Our findings suggest that integrating organizational resilience measures into MCS might be beneficial for organizations to manage resilience at the organizational level and achieve complementary effects. In addition, organizations could increase their resilience capacity by building resilience-oriented management controls (ROMC).","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2021-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130069240","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the nature and consequences of outliers in archival research, as well as the merits and limitations of robust regression estimators in identifying and downweighting their influence. Using simulated and actual data, we demonstrate how outliers can arise non-randomly from the data-generating process, research design choices such as scaling, and model misspecification. We find that robust regression estimators generate more precise estimates than OLS in common archival data. At the same time, these estimators can bias inferences due to their downweighting of substantial and nonrandom proportions of the data. We further demonstrate that model misspecification (e.g., a failure to account for nonlinear relations) can induce biases in robust regression estimates that are more severe than with OLS. Based on our analyses, we recommend researchers to carefully evaluate the causes and consequences of the nonrandom nature of outliers in their samples, to implement and interpret robust regression estimators with care, and to evaluate and disclose the sensitivity of robust estimators to key design choices.
{"title":"Outliers and Robust Inference in Archival Accounting Research","authors":"Joachim Gassen, David Veenman","doi":"10.2139/ssrn.3880942","DOIUrl":"https://doi.org/10.2139/ssrn.3880942","url":null,"abstract":"We study the nature and consequences of outliers in archival research, as well as the merits and limitations of robust regression estimators in identifying and downweighting their influence. Using simulated and actual data, we demonstrate how outliers can arise non-randomly from the data-generating process, research design choices such as scaling, and model misspecification. We find that robust regression estimators generate more precise estimates than OLS in common archival data. At the same time, these estimators can bias inferences due to their downweighting of substantial and nonrandom proportions of the data. We further demonstrate that model misspecification (e.g., a failure to account for nonlinear relations) can induce biases in robust regression estimates that are more severe than with OLS. Based on our analyses, we recommend researchers to carefully evaluate the causes and consequences of the nonrandom nature of outliers in their samples, to implement and interpret robust regression estimators with care, and to evaluate and disclose the sensitivity of robust estimators to key design choices.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127639127","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate whether and under which conditions top management uses or commits to not use new information when deciding about intra-year bonus target revisions, and how this use or non-use of information varies contingent on firms’ organizational design. First, we analyze whether firms’ use of new information for performance evaluation depends on the level of a manager’s incentive miscalibration that can be recalibrated with an intra-year target revision (i.e., benefits of using new information). Second, we explore whether higher degrees of delegated decision authority and intra-firm interdependencies increase firms’ costs of using new information, thereby increasing the cost of reacting to miscalibrated incentives. For a sample of sales executives, we find support for our hypotheses. Our paper contributes to literature streams highlighting the benefits of commitment in target setting and the relationship between organizational and incentive design.
{"title":"The (Non-)Use of New Information for Incentive Recalibration: Evidence from Sales Managers’ Intra-year Target Revisions","authors":"M. Arnold, M. Artz, Robert A. Grasser","doi":"10.2139/ssrn.2644933","DOIUrl":"https://doi.org/10.2139/ssrn.2644933","url":null,"abstract":"We investigate whether and under which conditions top management uses or commits to not use new information when deciding about intra-year bonus target revisions, and how this use or non-use of information varies contingent on firms’ organizational design. First, we analyze whether firms’ use of new information for performance evaluation depends on the level of a manager’s incentive miscalibration that can be recalibrated with an intra-year target revision (i.e., benefits of using new information). Second, we explore whether higher degrees of delegated decision authority and intra-firm interdependencies increase firms’ costs of using new information, thereby increasing the cost of reacting to miscalibrated incentives. For a sample of sales executives, we find support for our hypotheses. Our paper contributes to literature streams highlighting the benefits of commitment in target setting and the relationship between organizational and incentive design.","PeriodicalId":357263,"journal":{"name":"Managerial Accounting eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2020-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131379813","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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