An empirical examination of goals and performance-to-goal following the introduction of an incentive bonus plan with participative goal setting

Management Science

Volumn 56, Issue 1, 2010, Pages 90-109

  Anderson, Shannon W ^a,b   Dekker, Henri C ^c   Sedatole, Karen L ^d  

^a RICE UNIVERSITY   (United States)

^b UNIVERSITY OF MELBOURNE   (Australia)

^c VU UNIVERSITY AMSTERDAM   (Netherlands)

^d MICHIGAN STATE UNIVERSITY   (United States)

Author keywords

Compensation; Goal participation; Incentives; Pay for performance

Indexed keywords

EMPIRICAL EXAMINATION; FIELD RESEARCH; GOAL SETTING; INFORMATION EXCHANGES; MARGINAL RETURNS; PERFORMANCE IMPROVEMENTS; SALES PERFORMANCE;

MANAGERS; RETAIL STORES; SALES; STATISTICAL TESTS;

MANAGEMENT;

EID: 74849083233     PISSN: 00251909     EISSN: 15265501     Source Type: Journal    
DOI: 10.1287/mnsc.1090.1088     Document Type: Article

References (35)

1. Anthony, R. N., V. Govindarajan. 1998. Management Control Systems. Irwin McGraw-Hill, Boston.
2. Baiman, S., J. H. Evans. 1983. Pre-decision information and participative management control systems. J. Accounting Res. 21 (2) 371-395.
3. Banker, R. D., S. Y. Lee, G. Potter. 1996a. A field study of the impact of a performance-based incentive plan. J. Accounting Econom. 21 195-226.
4. Banker, R. D., G. Potter, D. Srinivasan. 2000. An empirical investigation of an incentive plan that includes nonfinancial performance measures. Accounting Rev. 75 (1) 65-92.
5. Banker, R. D., S. Y. Lee, G. Potter, D. Srinivasan. 1996b. Contextual analysis of performance impacts of outcome-based incentive compensation. Acad. Management J. 39 (4) 920-948.
6. Banker, R. D., S. Y. Lee, G. Potter, D. Srinivasan. 2001. An empirical analysis of continuing improvements following the implementation of a performance-based compensation plan. J. Accounting Econom. 30 (3) 315-350.
7. Banker, R. D., S. Y. Lee, G. Potter, D. Srinivasan. 2004. An empirical examination of the impacts from termination of a performance based incentive plan. Working paper, University of Pittsburgh, Pittsburgh.
8. Biglaiser, G., C. Mezzetti. 1993. Principals competing for an agent in the presence of adverse selection and moral hazard. J. Econom. Theory 61 (2) 302-330.
9. Bryk, A. S., S. W. Raudenbush. 1992. Hierarchical Linear Models: Applications and Data Analysis Methods. Sage Publications, London.
10. Chow, C. W., J. C. Cooper, W. Waller. 1988. Participative budgeting: Effects of a truth-inducing pay scheme and information asymmetry on slack and performance. Accounting Rev. 63 111-122.
11. Dunk, A. S. 1990. Budgetary participation, agreement on evaluation criteria and managerial performance: A research note. Accounting, Organ. Soc. 15 (3) 171-178.
12. Evans, J. H. I., R. L. Hannan, R. Krishnan, D. V. Moser. 2001. Honesty in managerial reporting. Accounting Rev. 76 (4) 537-559.
13. Fisher, J., J. R. Frederickson, S. A. Peffer. 2002. The effect of information asymmetry on negotiated budgets: An empirical investigation. Accounting, Organ. Soc. 27 (1/2) 27-43.
14. Fisher, J. G., J. R. Frederickson, S. A. Peffer. 2000. Budgeting: An experimental investigation of the effects of negotiation. Accounting Rev. 75 (1) 93-114.
15. Fisher, J. G., J. R. Frederickson, S. A. Peffer. 2006. Budget negotiations in multi-period settings. Accounting, Organ. Soc. 31 (6) 511-528.
16. Hopwood, A. G. 1972. An empirical study of the role of accounting data in performance evaluation. J. Accounting Res. 10 156-182.
17. ICSC. 2005. ICSC Chain Store Sales Trends, May 5. International Council of Shopping Centers, New York. 20 (2) S58-S90.
18. Kahn, L. M., P. D. Sherer. 1990. Contingent pay and managerial performance. Indust. Labor Relations Rev. 43 (3) 107-120.
19. Kreft, I., J. De Leeuw. 1998. Introducing Multilevel Modeling. Sage Publications, London.
20. Lambert, R. A. 2001. Contracting theory and accounting. J. Accounting Econom. 32 3-87.
21. Locke, E. A., J. F. Bryan, L. M. Kendall. 1968. Goals and intentions as mediators of the effects of financial incentives on behavior. J. Appl. Psych. 52 104-121.
22. Matsumura, E. M., J. Y. Shin. 2006. An empirical analysis of a relative performance-based incentive plan: Evidence from a postal service. Accounting Rev. 81 (3) 533-566.
23. Merchant, K. A., J.-F. Manzoni. 1989. The achievability of budget targets in profit centers: A field study. Accounting Rev. 64 (3) 539-558.
24. Merchant, K. A., W. A. Van Der Stede, L. Zheng. 2003. Disciplinary constraints on the advancement of knowledge: The case of organizational incentive systems. Accounting, Organ. Soc. 28 (2-3) 251-286.
25. Moers, F. 2005. Discretion and bias in performance evaluation: The impact of diversity and subjectivity. Accounting, Organ. Soc. 30 (1) 67-80.
26. Murphy, K. J. 1999. Executive compensation. O. Ashenfelter, D. Card, eds. Handbook of Labor Econom., Vol. 3B, Chap. 38. Elsevier Science, New York, 2485-2563.
27. Murphy, K. J. 2001. Performance standards in incentive contracts. J. Accounting Econom. 30 (3) 245-278.
28. Penno, M. 1984. Asymmetry of pre-decision information and managerial accounting. J. Accounting Res. 22 (1) 177.
29. Reichelstein, S. 1992. Constructing incentive schemes for government contracts: An application of agency theory. Accounting Rev. 67 (4) 712-731.
30. Thompson, K. R., W. A. Hochwarter, N. J. Mathys. 1997. Stretch targets: What makes them effective? Acad. Management Executive 11 (3) 48-60.
31. Van Der Stede, W. A. 2000. The relationship between two consequences of budgetary controls: Budgetary slack creation and managerial short-term orientation. Accounting, Organ. Soc. 25 (6) 609-622.
32. Walker, K. B., E. N. Johnson. 1999. The effects of a budget-based incentive compensation scheme on the budgeting behavior of managers and subordinates. J. Management Accounting Res. 11 1-28.
33. Weitzman, M. 1980. The "ratchet principle" and performance incentives. Bell J. Econom. 11 (1) 302-308.
34. Weitzman, M. L. 1976. The new soviet incentive model. Bell J. Econom. 7 (1) 251-257.
35. Young, S. M. 1985. Participative budgeting: The effects of risk aversion and asymmetric information on budgetary slack. J. Accounting Res. 23 (2) 829-842.