Successful interorganizational governance requires practices that reduce information asymmetry between supply chain partners and foster collaborative activities. We study one potential practice—suppliers aligning their performance measurement systems with their largest customer’s performance priorities. Using survey data collected from face-to-face interviews with executives from over 1,000 electronic components suppliers, we find that suppliers with greater customer-supplier information asymmetry and higher partner interdependence have performance measurement systems that align more with their largest customer’s performance priorities. These results are particularly apparent when the exchange involves complex components and when the largest customer represents a greater proportion of supplier sales, suggesting that performance measurement system alignment is of greater value in such situations. We conclude that the performance priorities of large customers play a role in shaping suppliers' management control systems.
{"title":"Aligning performance measurement systems across the supply chain: Evidence from electronic components suppliers","authors":"Neale G. O’Connor, Jason D. Schloetzer","doi":"10.2308/jmar-2022-003","DOIUrl":"https://doi.org/10.2308/jmar-2022-003","url":null,"abstract":"Successful interorganizational governance requires practices that reduce information asymmetry between supply chain partners and foster collaborative activities. We study one potential practice—suppliers aligning their performance measurement systems with their largest customer’s performance priorities. Using survey data collected from face-to-face interviews with executives from over 1,000 electronic components suppliers, we find that suppliers with greater customer-supplier information asymmetry and higher partner interdependence have performance measurement systems that align more with their largest customer’s performance priorities. These results are particularly apparent when the exchange involves complex components and when the largest customer represents a greater proportion of supplier sales, suggesting that performance measurement system alignment is of greater value in such situations. We conclude that the performance priorities of large customers play a role in shaping suppliers' management control systems.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-11-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46750880","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 provide a conceptual framework for analyzing studies on management controls and management control systems (MCSs). This framework describes and analyzes the directing and activating processes of management controls and MCSs. Because our focus is on why management controls are effective, our conceptual framework complements earlier frameworks that focus on specific empirical methods, controls, and literature maps. We discuss several applications of the framework, such as depicting an individual research study, comparing multiple research studies examining the same control, and organizing an area of research. Our approach benefits consumers of management accounting research by increasing understanding and access to extant research. In addition, the application of our approach can reveal gaps in the literature or the potential for mediating factors to explain conflicting findings and can thus inform future research.
{"title":"The Dual-Role Framework: A Structured Approach for Analyzing Management Controls","authors":"J. Bol, S. Loftus","doi":"10.2308/jmar-2021-065","DOIUrl":"https://doi.org/10.2308/jmar-2021-065","url":null,"abstract":"We provide a conceptual framework for analyzing studies on management controls and management control systems (MCSs). This framework describes and analyzes the directing and activating processes of management controls and MCSs. Because our focus is on why management controls are effective, our conceptual framework complements earlier frameworks that focus on specific empirical methods, controls, and literature maps. We discuss several applications of the framework, such as depicting an individual research study, comparing multiple research studies examining the same control, and organizing an area of research. Our approach benefits consumers of management accounting research by increasing understanding and access to extant research. In addition, the application of our approach can reveal gaps in the literature or the potential for mediating factors to explain conflicting findings and can thus inform future research.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46852696","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 examine a unique setting of publicly listed Chinese state-owned enterprises (SOEs), where some top executives are paid by government-controlled parent firms rather than by the firms where these executives work. Because their reported compensation is zero, these executives have been ignored in the literature. We find that the CEOs’ own personal characteristics, the nature of the CEO’s job responsibilities, and the environment in which the firm operates are significantly related to the CEO’s contract type. We also document that parent-paid CEOs have a significantly higher probability of future promotion than other CEOs. Compared to peer firms that directly pay their CEOs, firms with parent-paid CEOs have higher asset turnover. Contrary to concerns that parent-paid executives might extract resources from minority shareholders to the benefit of the parent SOE or local government, we document less use of tunneling or tax strategies under parent-paid contracts.
{"title":"Career Concerns, Contract Choice, and “Unpaid” Executives","authors":"Hui Chen, Wei Luo, N. Soderstrom","doi":"10.2308/jmar-2020-004","DOIUrl":"https://doi.org/10.2308/jmar-2020-004","url":null,"abstract":"We examine a unique setting of publicly listed Chinese state-owned enterprises (SOEs), where some top executives are paid by government-controlled parent firms rather than by the firms where these executives work. Because their reported compensation is zero, these executives have been ignored in the literature. We find that the CEOs’ own personal characteristics, the nature of the CEO’s job responsibilities, and the environment in which the firm operates are significantly related to the CEO’s contract type. We also document that parent-paid CEOs have a significantly higher probability of future promotion than other CEOs. Compared to peer firms that directly pay their CEOs, firms with parent-paid CEOs have higher asset turnover. Contrary to concerns that parent-paid executives might extract resources from minority shareholders to the benefit of the parent SOE or local government, we document less use of tunneling or tax strategies under parent-paid contracts.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47509180","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}
In impact investing, impact risk encompasses the probability that investment projects may fail to achieve the expected positive impact (i.e., positive impact risk) and/or may have a negative impact (i.e., negative impact risk). Using an inductive research approach, this study examines how impact investing organizations adopt control mechanisms to manage impact risk. It finds that impact investors adopt a wide range of input, behavior, and output control mechanisms to manage impact risk that may arise from investee-level, investor-level, and system-level operations. Also, to manage impact risk, investors establish control mechanisms to influence relevant actors not only within a firm’s boundary but also outside its boundary. Given the inherent complexity and ambiguity in managing impact risk in impact investing, control mechanisms appear to rely heavily on judgment and experience and adhere more to the “satisficing” principle. Furthermore, investors tend to focus more on managing positive impact risk than negative impact risk.
{"title":"Impact risk management in impact investing: How impact investing organizations adopt control mechanisms to manage their impact risk","authors":"Syrus M. Islam","doi":"10.2308/jmar-2021-041","DOIUrl":"https://doi.org/10.2308/jmar-2021-041","url":null,"abstract":"In impact investing, impact risk encompasses the probability that investment projects may fail to achieve the expected positive impact (i.e., positive impact risk) and/or may have a negative impact (i.e., negative impact risk). Using an inductive research approach, this study examines how impact investing organizations adopt control mechanisms to manage impact risk. It finds that impact investors adopt a wide range of input, behavior, and output control mechanisms to manage impact risk that may arise from investee-level, investor-level, and system-level operations. Also, to manage impact risk, investors establish control mechanisms to influence relevant actors not only within a firm’s boundary but also outside its boundary. Given the inherent complexity and ambiguity in managing impact risk in impact investing, control mechanisms appear to rely heavily on judgment and experience and adhere more to the “satisficing” principle. Furthermore, investors tend to focus more on managing positive impact risk than negative impact risk.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48408278","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 examine the relative effects of managers using binding targets to reward workers before observing their performance (explicit targets) versus managers deciding whether to reward workers after observing their performance (implicit targets) in the common setting where managers cannot directly observe workers’ effort and ability. In a multiperiod interactive experiment, we find that workers’ performance, positive reciprocity, and trust toward their managers are lower under explicit targets than implicit targets. Evidence suggests that workers under explicit targets withhold effort because managers often set ineffective targets, while workers under implicit targets provide close to maximum effort because they trust managers to reward them accordingly. Importantly, providing managers with peer performance benchmark information improves the effectiveness of explicit targets by decreasing target variance and increasing workers’ perceived fairness of the target-setting process. Our results highlight how the type of performance targets and peer performance benchmarking can motivate worker performance and build trust.
{"title":"The Effects of Explicit Versus Implicit Targets on Worker Performance, Reciprocity, and Trust, and the Role of Peer Benchmarking","authors":"E. Chan, Jeremy B. Lill","doi":"10.2308/jmar-2021-058","DOIUrl":"https://doi.org/10.2308/jmar-2021-058","url":null,"abstract":"We examine the relative effects of managers using binding targets to reward workers before observing their performance (explicit targets) versus managers deciding whether to reward workers after observing their performance (implicit targets) in the common setting where managers cannot directly observe workers’ effort and ability. In a multiperiod interactive experiment, we find that workers’ performance, positive reciprocity, and trust toward their managers are lower under explicit targets than implicit targets. Evidence suggests that workers under explicit targets withhold effort because managers often set ineffective targets, while workers under implicit targets provide close to maximum effort because they trust managers to reward them accordingly. Importantly, providing managers with peer performance benchmark information improves the effectiveness of explicit targets by decreasing target variance and increasing workers’ perceived fairness of the target-setting process. Our results highlight how the type of performance targets and peer performance benchmarking can motivate worker performance and build trust.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43624933","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}
{"title":"Learning in the Past, Looking to the Future: JMAR Lifetime Achievement Paper Fall 2022","authors":"A. Wu","doi":"10.2308/jmar-10814","DOIUrl":"https://doi.org/10.2308/jmar-10814","url":null,"abstract":"","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49362230","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}
Ethnographers must balance the tensions between the emic and etic dimensions of research. For example, they must simultaneously become an emic insider of the group studied, while at the same time retain their analytical distance to remain an etic outsider. This article discusses how these tensions manifest in head-, field-, and text-work by reviewing 52 self-declared management accounting ethnographies published between 1997 and 2017. The review shows that there is an (over-)emphasis on a realist tale-telling approach, in which the author’s voice is almost always effaced as tale-tellers detach themselves from the tales being told. As alternatives, we highlight confessional and impressionist tale-telling approaches. While all three approaches offer advantages for addressing the emic-etic balance, they also all involve sacrifices. Thus, we urge researchers to give deeper consideration to text-work choices in management accounting ethnographies.
{"title":"Balancing Emic-Etic Tensions in the Field-, Head-, and Text-Work of Ethnographic Management Accounting Research","authors":"Matthew Bamber, Matthäus Tekathen","doi":"10.2308/jmar-2019-504","DOIUrl":"https://doi.org/10.2308/jmar-2019-504","url":null,"abstract":"Ethnographers must balance the tensions between the emic and etic dimensions of research. For example, they must simultaneously become an emic insider of the group studied, while at the same time retain their analytical distance to remain an etic outsider. This article discusses how these tensions manifest in head-, field-, and text-work by reviewing 52 self-declared management accounting ethnographies published between 1997 and 2017. The review shows that there is an (over-)emphasis on a realist tale-telling approach, in which the author’s voice is almost always effaced as tale-tellers detach themselves from the tales being told. As alternatives, we highlight confessional and impressionist tale-telling approaches. While all three approaches offer advantages for addressing the emic-etic balance, they also all involve sacrifices. Thus, we urge researchers to give deeper consideration to text-work choices in management accounting ethnographies.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46171336","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}
The staggered rejection of the inevitable disclosure doctrine (IDD) by state courts increases the mobility of both managerial and rank-and-file employee labor markets. Flammer and Kacperczyk (2019) report a positive impact of the IDD rejection on firms’ corporate social responsibility (CSR) and interpret the finding as managers using CSR to retain employees. We propose and test managerial incentives to grow their external employment potential as another explanation. We find that the IDD rejection impact is stronger when industry firms are more likely to hire external CEOs and when external tournament prizes are greater, and weaker when CEOs are held up by unvested equity grants and when governance control is stronger. We fail to find that the IDD rejection effect varies with employee incentives. We further find that CSR investment does help CEOs obtain sought-after personal benefits by increasing their total pay and the likelihood of landing a new executive position.
{"title":"Managerial Labor Market Mobility and Corporate Social Responsibility","authors":"Yonghong Jia, Xinghua Gao, Lily H. Fang","doi":"10.2308/jmar-2021-067","DOIUrl":"https://doi.org/10.2308/jmar-2021-067","url":null,"abstract":"The staggered rejection of the inevitable disclosure doctrine (IDD) by state courts increases the mobility of both managerial and rank-and-file employee labor markets. Flammer and Kacperczyk (2019) report a positive impact of the IDD rejection on firms’ corporate social responsibility (CSR) and interpret the finding as managers using CSR to retain employees. We propose and test managerial incentives to grow their external employment potential as another explanation. We find that the IDD rejection impact is stronger when industry firms are more likely to hire external CEOs and when external tournament prizes are greater, and weaker when CEOs are held up by unvested equity grants and when governance control is stronger. We fail to find that the IDD rejection effect varies with employee incentives. We further find that CSR investment does help CEOs obtain sought-after personal benefits by increasing their total pay and the likelihood of landing a new executive position.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44840273","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}
Prior research shows that managers use discretion to reduce the effect of “bad luck” on employees’ performance-based compensation but not to reduce the effect of “good luck,” due to fairness concerns. In a setting without manager discretion, we investigate whether objective compensation plans that account for luck can be used to reduce fairness concerns. We show that while such compensation plans are perceived as fairer ex ante, they do not produce uniformly higher perceived fairness ex post. Individuals who experience bad luck believe their compensation is more fair if the compensation plan limits the effect of luck on their compensation than if the compensation plan allows luck to influence their compensation. In contrast, individuals who experience good luck believe their compensation is less fair if the compensation plan limits the effect of luck on their compensation. These findings highlight the complex relationship among incentives, employee selection, retention, satisfaction, and motivation.
{"title":"Fairness and Luck: Contract Away or Come What May?","authors":"H. S. Asay, Jace B. Garrett, W. B. Tayler","doi":"10.2308/jmar-2020-029","DOIUrl":"https://doi.org/10.2308/jmar-2020-029","url":null,"abstract":"Prior research shows that managers use discretion to reduce the effect of “bad luck” on employees’ performance-based compensation but not to reduce the effect of “good luck,” due to fairness concerns. In a setting without manager discretion, we investigate whether objective compensation plans that account for luck can be used to reduce fairness concerns. We show that while such compensation plans are perceived as fairer ex ante, they do not produce uniformly higher perceived fairness ex post. Individuals who experience bad luck believe their compensation is more fair if the compensation plan limits the effect of luck on their compensation than if the compensation plan allows luck to influence their compensation. In contrast, individuals who experience good luck believe their compensation is less fair if the compensation plan limits the effect of luck on their compensation. These findings highlight the complex relationship among incentives, employee selection, retention, satisfaction, and motivation.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46391260","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}
Prior literature shows that how creditors monitor borrowers and exercise control rights affect borrowers’ investment and financial policies, but little is known about their impact on borrowers’ operating decisions. The availability of a credit default swap (CDS) reduces creditors’ monitoring incentives ex ante but increases their liquidation incentives in the events of default ex post. After the inception of CDS trading, reference firms exhibit an increase in the elasticity of cost structure. Results are consistent in instrumental variable analyses and are robust with alternative matching samples. The increase in cost structure elasticity is more pronounced for firms with greater credit risk and more restrictive covenants, financially constrained firms, and those face greater product market competition and provide higher convexity in managers’ compensation. We provide the first evidence showing that managers choose a more elastic cost structure when creditors become less forgiving.
{"title":"THE INCEPTION OF CREDIT DEFAULT SWAP TRADING AND CORPORATE COST STRUCTURE","authors":"Shunlan Fang, Xiaoling Pu, Sarah Qian Wang","doi":"10.2308/jmar-2021-055","DOIUrl":"https://doi.org/10.2308/jmar-2021-055","url":null,"abstract":"Prior literature shows that how creditors monitor borrowers and exercise control rights affect borrowers’ investment and financial policies, but little is known about their impact on borrowers’ operating decisions. The availability of a credit default swap (CDS) reduces creditors’ monitoring incentives ex ante but increases their liquidation incentives in the events of default ex post. After the inception of CDS trading, reference firms exhibit an increase in the elasticity of cost structure. Results are consistent in instrumental variable analyses and are robust with alternative matching samples. The increase in cost structure elasticity is more pronounced for firms with greater credit risk and more restrictive covenants, financially constrained firms, and those face greater product market competition and provide higher convexity in managers’ compensation. We provide the first evidence showing that managers choose a more elastic cost structure when creditors become less forgiving.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2022-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68996441","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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