{"title":"Six Impossible Things Before Breakfast","authors":"Joan Luft","doi":"10.2308/jmar-10767","DOIUrl":"https://doi.org/10.2308/jmar-10767","url":null,"abstract":"","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49659746","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}
Andrew H. Newman, Bryan Stikeleather, Nathan Waddoups
Employees often make recurring decisions that entail deciding whether to continue using a “status quo” strategy that yields reliable results or try an alternative strategy of unknown efficacy. Via an experiment, we study how relative performance information (RPI) influences this choice and its expected outcome. We theorize and find that RPI has both a social motivational effect that increases employees’ propensity to explore alternative strategies and an informational effect that helps them determine whether exploring alternative strategies will likely help or harm their performance (i.e., it conveys decision-facilitating benefits). Likewise, as predicted, we also find that RPI’s decision-facilitating benefit occurs more strongly among low- versus high-performing employees. Our study helps inform employers about the decision-facilitating implications of incorporating RPI into their performance feedback systems.
{"title":"How Relative Performance Information Affects Exploration-exploitation Decisions","authors":"Andrew H. Newman, Bryan Stikeleather, Nathan Waddoups","doi":"10.2308/jmar-2020-070","DOIUrl":"https://doi.org/10.2308/jmar-2020-070","url":null,"abstract":"Employees often make recurring decisions that entail deciding whether to continue using a “status quo” strategy that yields reliable results or try an alternative strategy of unknown efficacy. Via an experiment, we study how relative performance information (RPI) influences this choice and its expected outcome. We theorize and find that RPI has both a social motivational effect that increases employees’ propensity to explore alternative strategies and an informational effect that helps them determine whether exploring alternative strategies will likely help or harm their performance (i.e., it conveys decision-facilitating benefits). Likewise, as predicted, we also find that RPI’s decision-facilitating benefit occurs more strongly among low- versus high-performing employees. Our study helps inform employers about the decision-facilitating implications of incorporating RPI into their performance feedback systems.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43326580","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}
Successful employee engagement in cognitively challenging tasks is a driving force of performance in modern organizations. Research has shown that performance feedback can be a powerful management control tool to stimulate engagement in such tasks; however, little is known about how individuals with different achievement motive respond to it. This paper examines the main and interactive effects of achievement motive and performance feedback on engagement in tasks that become progressively more challenging. We designed a within-subject experiment deploying an increasingly difficult cognitive task. We find that feedback is a key determinant of engagement in challenging tasks, as the main effect and in the interaction with achievement motive. Failure feedback discourages individuals with low achievement motive more than those with high achievement motive. Success feedback strongly encourages individuals to engage in a challenging task and levels out differences in achievement motive.
{"title":"The Moderating Effect of Achievement Motive on Performance Feedback in Choices of Challenging Tasks","authors":"S. Slapničar, Karla Oblak, Mina Ličen","doi":"10.2139/ssrn.3918755","DOIUrl":"https://doi.org/10.2139/ssrn.3918755","url":null,"abstract":"Successful employee engagement in cognitively challenging tasks is a driving force of performance in modern organizations. Research has shown that performance feedback can be a powerful management control tool to stimulate engagement in such tasks; however, little is known about how individuals with different achievement motive respond to it. This paper examines the main and interactive effects of achievement motive and performance feedback on engagement in tasks that become progressively more challenging. We designed a within-subject experiment deploying an increasingly difficult cognitive task. We find that feedback is a key determinant of engagement in challenging tasks, as the main effect and in the interaction with achievement motive. Failure feedback discourages individuals with low achievement motive more than those with high achievement motive. Success feedback strongly encourages individuals to engage in a challenging task and levels out differences in achievement motive.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49296754","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 study analyzes two important features of real recruitment and selection processes: competition among agents and pre-contractual announcements of agents’ efforts. As efforts are non-contractible in reality, both features are irrelevant from a standard economic perspective. However, our experiment demonstrates their behavioral relevance. Specifically, both features positively affect agents’ effort choices. Agent competition shifts the perception of bargaining power towards the principal and agents feel partly committed to their non-binding effort announcements. This supports recent research on the social norm of promise-keeping. Moreover, we provide evidence that both factors interact in that effort announcements have a particularly large effect under agent competition, i.e., when principals base their selection on the announcements. Principals anticipate the effect of agent competition in their contract offers: they offer lower surplus shares and can realize higher payoffs, while agents have lower payoffs.
{"title":"Do Job Candidates' Effort Promises Matter When the Labor Market is Competitive? Experimental Evidence","authors":"M. Arnold, Robert A. Grasser","doi":"10.2308/JMAR-19-067","DOIUrl":"https://doi.org/10.2308/JMAR-19-067","url":null,"abstract":"This study analyzes two important features of real recruitment and selection processes: competition among agents and pre-contractual announcements of agents’ efforts. As efforts are non-contractible in reality, both features are irrelevant from a standard economic perspective. However, our experiment demonstrates their behavioral relevance. Specifically, both features positively affect agents’ effort choices. Agent competition shifts the perception of bargaining power towards the principal and agents feel partly committed to their non-binding effort announcements. This supports recent research on the social norm of promise-keeping. Moreover, we provide evidence that both factors interact in that effort announcements have a particularly large effect under agent competition, i.e., when principals base their selection on the announcements. Principals anticipate the effect of agent competition in their contract offers: they offer lower surplus shares and can realize higher payoffs, while agents have lower payoffs.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47882548","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 empirically examine the impact of operating cash flows on future earnings targets in CEOs' annual cash bonus plans. Using target and actual compensation earnings-per-share (EPS) disclosed in proxy statements of large U.S. public firms, we find that operating cash flows have no significant incremental effects on the revision of future earnings targets in the presence of current earnings. We also observe a positive association between future target achievability and current operating cash flows, indicating that firms with higher operating cash flows set significantly easier future earnings targets for their CEOs. These findings suggest that the higher persistence of operating cash flows in predicting future earnings is not fully incorporated into target setting. Further analyses reveal that the positive association between future target achievability and current operating cash flows is attributable to both expectation bias and contractual considerations to reward CEOs who deliver greater cash flows and to limit activities that sacrifice cash flows.
{"title":"Operating Cash Flows and Earnings Target Revision: Evidence from Annual Cash Bonus Plans for CEOs","authors":"L. Li, Shuyang Wang, Wei Zhu","doi":"10.2308/JMAR-19-037","DOIUrl":"https://doi.org/10.2308/JMAR-19-037","url":null,"abstract":"We empirically examine the impact of operating cash flows on future earnings targets in CEOs' annual cash bonus plans. Using target and actual compensation earnings-per-share (EPS) disclosed in proxy statements of large U.S. public firms, we find that operating cash flows have no significant incremental effects on the revision of future earnings targets in the presence of current earnings. We also observe a positive association between future target achievability and current operating cash flows, indicating that firms with higher operating cash flows set significantly easier future earnings targets for their CEOs. These findings suggest that the higher persistence of operating cash flows in predicting future earnings is not fully incorporated into target setting. Further analyses reveal that the positive association between future target achievability and current operating cash flows is attributable to both expectation bias and contractual considerations to reward CEOs who deliver greater cash flows and to limit activities that sacrifice cash flows.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-04-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43424959","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}
Many fundamental managerial accounting topics intersect with the corporate tax function. For example, transfer prices, which firms use for the purpose of performance evaluation, can have a dramatic effect on corporate income taxes. While some studies examine the intersection of managerial accounting and corporate income tax, the topics are most commonly researched in isolation. We believe our understanding of managerial accounting and corporate income tax issues can be significantly enhanced through concerted efforts to consider them jointly as they relate to a variety of issues.
{"title":"Special Interest Forum on the Interface between Managerial Accounting and Tax","authors":"Tim Baldenius, Scott D. Dyreng","doi":"10.2308/JMAR-10760","DOIUrl":"https://doi.org/10.2308/JMAR-10760","url":null,"abstract":"Many fundamental managerial accounting topics intersect with the corporate tax function. For example, transfer prices, which firms use for the purpose of performance evaluation, can have a dramatic effect on corporate income taxes. While some studies examine the intersection of managerial accounting and corporate income tax, the topics are most commonly researched in isolation. We believe our understanding of managerial accounting and corporate income tax issues can be significantly enhanced through concerted efforts to consider them jointly as they relate to a variety of issues.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45266357","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}
Recent research documents the phenomenon of asymmetric cost behavior where the cost structure of the firm changes differently in response to an increase in sales than to a decrease in sales and attributes this behavior to deliberate decisions made by managers that face adjustment costs. In this paper, we test the relationship between asymmetric cost behavior and equity incentives that are known to impact managerial decision making. We find that a measure of the sensitivity of managerial wealth to stock price (delta) is positively related to sticky costs where costs increase more quickly in response to a sales increase than they decline in response to a sales decrease. Conversely, we find that a measure of the sensitivity of managerial wealth to stock volatility (vega) is positively related to anti-sticky costs where costs increase to a lesser extent in response to a sales increase than they decline in response to a sales decrease. These results indicate the importance that equity incentives have on managerial resource adjustment decisions in response to changes in firm activity levels.
{"title":"Managers' Equity Incentives and Asymmetric Cost Behavior","authors":"Eric R. Brisker, Jong Chool Park, Hakjoon Song","doi":"10.2308/JMAR-17-029","DOIUrl":"https://doi.org/10.2308/JMAR-17-029","url":null,"abstract":"Recent research documents the phenomenon of asymmetric cost behavior where the cost structure of the firm changes differently in response to an increase in sales than to a decrease in sales and attributes this behavior to deliberate decisions made by managers that face adjustment costs. In this paper, we test the relationship between asymmetric cost behavior and equity incentives that are known to impact managerial decision making. We find that a measure of the sensitivity of managerial wealth to stock price (delta) is positively related to sticky costs where costs increase more quickly in response to a sales increase than they decline in response to a sales decrease. Conversely, we find that a measure of the sensitivity of managerial wealth to stock volatility (vega) is positively related to anti-sticky costs where costs increase to a lesser extent in response to a sales increase than they decline in response to a sales decrease. These results indicate the importance that equity incentives have on managerial resource adjustment decisions in response to changes in firm activity levels.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46906476","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 use of tangible rewards to motivate employees is common in North American organizations. However, there is considerable variation regarding the nature of tangible rewards used with some firms offering hedonic items (e.g., wants) and others offering utilitarian items (e.g., needs). We use two studies to examine the effects of tangible reward nature on employee mental accounting and effort. In Study 1, consistent with predictions, we find that hedonic tangible rewards are mentally accounted for separately from utilitarian tangible rewards, and that hedonic tangible rewards are more likely categorized separately from regular earnings than are utilitarian tangible rewards. In Study 2, as predicted, we find hedonic tangible rewards lead to greater effort than utilitarian tangible rewards. Collectively, results from our two studies demonstrate the motivational benefits of offering performance-based hedonic tangible rewards rather than utilitarian tangible rewards and offer new insights regarding the mental accounting mechanisms underlying these effects.
{"title":"Needs Versus Wants: The Mental Accounting and Effort Effects of Tangible Rewards","authors":"T. Mitchell, Adam Presslee, A. Schulz, Alan Webb","doi":"10.2308/JMAR-2019-505","DOIUrl":"https://doi.org/10.2308/JMAR-2019-505","url":null,"abstract":"The use of tangible rewards to motivate employees is common in North American organizations. However, there is considerable variation regarding the nature of tangible rewards used with some firms offering hedonic items (e.g., wants) and others offering utilitarian items (e.g., needs). We use two studies to examine the effects of tangible reward nature on employee mental accounting and effort. In Study 1, consistent with predictions, we find that hedonic tangible rewards are mentally accounted for separately from utilitarian tangible rewards, and that hedonic tangible rewards are more likely categorized separately from regular earnings than are utilitarian tangible rewards. In Study 2, as predicted, we find hedonic tangible rewards lead to greater effort than utilitarian tangible rewards. Collectively, results from our two studies demonstrate the motivational benefits of offering performance-based hedonic tangible rewards rather than utilitarian tangible rewards and offer new insights regarding the mental accounting mechanisms underlying these effects.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44525125","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}
Many companies encourage employees to set their own performance goals and do not attach formal incentives to the achievement of these goals. In this environment, some organizations make employees' self-set performance goals public while other organizations do not. We predict that, due to strategic concerns induced by goal publicity and competition, making goals public will be more likely to lead employees to lowball their goals when they work under tournament incentives than under piece-rate incentives. Consistent with this prediction, our experimental results reveal that making self-set performance goals public decreases goal level under tournament incentives, but has no significant effect on goal level under piece-rate incentives. Results of our study suggest that the practice of making self-set goals public is potentially more compatible with organizations with a collaborative culture than those with a competitive culture.
{"title":"The Effects of Goal Publicity and Incentives on Self-Set Performance Goals","authors":"Clara Xiaoling Chen, Huaxiang Yin, Y. Zhang","doi":"10.2308/JMAR-19-071","DOIUrl":"https://doi.org/10.2308/JMAR-19-071","url":null,"abstract":"Many companies encourage employees to set their own performance goals and do not attach formal incentives to the achievement of these goals. In this environment, some organizations make employees' self-set performance goals public while other organizations do not. We predict that, due to strategic concerns induced by goal publicity and competition, making goals public will be more likely to lead employees to lowball their goals when they work under tournament incentives than under piece-rate incentives. Consistent with this prediction, our experimental results reveal that making self-set performance goals public decreases goal level under tournament incentives, but has no significant effect on goal level under piece-rate incentives. Results of our study suggest that the practice of making self-set goals public is potentially more compatible with organizations with a collaborative culture than those with a competitive culture.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47955120","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 conduct an experiment to examine the effects of multi-level group identification on intergroup helping behavior. We predict and find that stronger identification with a sub-group and a superordinate group – separately and interactively – increase helping behavior. We provide evidence that the relationships between stronger identification and helping behavior operate in part through increased salience of superordinate group boundaries, perceived potential benefits to one’s own group of intergroup helping, and positive affect. Collectively, our findings illustrate the importance of understanding how individuals identify with the different groups naturally present in organizations, and highlight how identification can be used as an informal control to motivate important organizational behaviors. Such an understanding can help firms determine the best organizational hierarchy, develop communication and control strategies to build identification at appropriate levels, and establish evaluation and compensation systems that measure and reward outcomes in a manner that accounts for these group effects.
{"title":"The Effects of Multi-Level Group Identification on Intergroup Helping Behavior","authors":"Jason L. Brown, Geoffrey B. Sprinkle, Dan Way","doi":"10.2308/JMAR-2019-506","DOIUrl":"https://doi.org/10.2308/JMAR-2019-506","url":null,"abstract":"We conduct an experiment to examine the effects of multi-level group identification on intergroup helping behavior. We predict and find that stronger identification with a sub-group and a superordinate group – separately and interactively – increase helping behavior. We provide evidence that the relationships between stronger identification and helping behavior operate in part through increased salience of superordinate group boundaries, perceived potential benefits to one’s own group of intergroup helping, and positive affect. Collectively, our findings illustrate the importance of understanding how individuals identify with the different groups naturally present in organizations, and highlight how identification can be used as an informal control to motivate important organizational behaviors. Such an understanding can help firms determine the best organizational hierarchy, develop communication and control strategies to build identification at appropriate levels, and establish evaluation and compensation systems that measure and reward outcomes in a manner that accounts for these group effects.","PeriodicalId":46474,"journal":{"name":"Journal of Management Accounting Research","volume":null,"pages":null},"PeriodicalIF":1.7,"publicationDate":"2021-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44604358","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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