The Interplay Between Forward-Looking Measures and Target Setting

Published Online:https://doi.org/10.1287/mnsc.2016.2481

References

  • Anderson S, Dekker H, Sedatole K (2010) An empirical examination of goals and performance-to-goal following the introduction of an incentive bonus plan with participative goal setting. Management Sci. 56(1):90–109.LinkGoogle Scholar
  • Aranda C, Arellano J, Davilla A (2014) Ratcheting and the role of relative target setting. Accounting Rev. 89(4):1197–1226.CrossrefGoogle Scholar
  • Baker G, Gibbs M, Holmstrom B (1994a) The internal economics of the firm: Evidence from personnel data. Quart. J. Econom. 109(4):881–919.CrossrefGoogle Scholar
  • Baker G, Gibbs M, Holmstrom B (1994b) The wage policy of a firm. Quart. J. Econom. 109(4):921–955.CrossrefGoogle Scholar
  • Banker R, Potter G, Srinivasan D (2000) An empirical investigation of an incentive plan that includes nonfinancial performance measures. J. Accounting Econom. 30(3):315–350.CrossrefGoogle Scholar
  • Baron D, Besanko D (1984) Regulation and information in a continuing relationship. Inform. Econom. Policy 1(3):267–302.CrossrefGoogle Scholar
  • Bol J, Lill J (2015) Performance target revisions in incentive contracts: Do information and trust reduce ratcheting and the ratchet effect? Accounting Rev. 90(5):1755–1778.CrossrefGoogle Scholar
  • Bol J, Smith S (2011) Spillover effects in subjective performance evaluation: Bias and the asymmetric influence of controllability. Accounting Rev. 86(4):1213–1230.CrossrefGoogle Scholar
  • Bouwens J, Kroos P (2011) Target ratcheting and effort reduction. J. Accounting Econom. 51(1–2):171–185.CrossrefGoogle Scholar
  • Bouwens J, van Lent L (2007) Assessing the performance of business unit managers. J. Accounting Res. 45(4):667–697.CrossrefGoogle Scholar
  • Campbell D (2008) Nonfinancial performance measures and promotion-based incentives. J. Accounting Res. 46(2):297–332.CrossrefGoogle Scholar
  • Casas-Arce P, Holzhacker M, Mahlendorf M, Matejka M (2015) Relative performance evaluation and the ratchet effect. Working paper, Arizona State University, Tempe.Google Scholar
  • Ederhof M (2010) Discretion in bonus plans. Accounting Rev. 85(6):1921–1949.CrossrefGoogle Scholar
  • Gow I, Ormazabal G, Taylor D (2010) Correcting for cross-sectional and time-series dependence in accounting research. Accounting Rev. 85(2):483–512.CrossrefGoogle Scholar
  • Grabner I, Moers F (2013) Managers’ choices of performance measures in promotion decisions: An analysis of alternative job assignments. J. Accounting Res. 51(5):1187–1220.CrossrefGoogle Scholar
  • Holmstrom B (1979) Moral hazard and observability. Bell J. Econom. 10(1):74–91.CrossrefGoogle Scholar
  • Indjejikian R, Nanda DJ (2002) Executive target bonuses and what they imply about performance standards. Accounting Rev. 77(4):793–819.CrossrefGoogle Scholar
  • Indjejikian R, Matejka M, Schloetzer J (2014a) Target ratcheting and incentives: Theory, evidence, and new opportunities. Accounting Rev. 89(4):1259–1267.CrossrefGoogle Scholar
  • Indjejikian R, Matejka M, Merchant K, Van der Stede W (2014b) Earnings targets and annual bonus incentives. Accounting Rev. 89(4):1227–1258.CrossrefGoogle Scholar
  • Ittner C, Larcker D (1998) Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction. J. Accounting Res. 36(1):1–35.CrossrefGoogle Scholar
  • Ittner C, Larcker D, Rajan M (1997) The choice of performance measures in annual bonus contracts. Accounting Rev. 72(2):231–255.Google Scholar
  • Ittner C, Larcker D, Meyer M (2003) Subjectivity and the weighting of performance measures: Evidence from a balanced scorecard. Accounting Rev. 78(3):725–758.CrossrefGoogle Scholar
  • Leone A, Rock S (2002) Empirical tests of budget ratcheting and its effects on managers’ discretionary accrual choices. J. Accounting Econom. 33(1):43–67.CrossrefGoogle Scholar
  • Leone A, Misra S, Zimmerman J (2006) Investigating dynamic sales quota. Working paper, University of Rochester, Rochester, NY.Google Scholar
  • Matejka M, Merchant K, van der Stede W (2009) Employment horizon and the choice of performance measures: Empirical evidence from annual bonus plans of loss-making entities. Management Sci. 55(6):890–905.LinkGoogle Scholar
  • Milgrom P, Roberts J (1992) Economics, Organization and Management (Prentice-Hall International, Englewood Cliffs, NJ).Google Scholar
  • Murphy K (2000) Performance standards in incentive contracts. J. Accounting Econom. 30(3):245–278.CrossrefGoogle Scholar
  • Nagar V, Rajan M (2001) The revenue implications of financial and operational measures of quality. Accounting Rev. 76(4):495–513.CrossrefGoogle Scholar
  • Nagar V, Rajan M (2005) Measuring customer relationships: The case of the retail banking industry. Management Sci. 51(6):904–919.LinkGoogle Scholar
  • Petersen M (2009) Estimating standard errors in finance data sets: Comparing approaches. Rev. Financial Stud. 22(1):435–480.CrossrefGoogle Scholar
  • Vuong Q (1989) Likelihood ratio tests for model selection and non-nested hypotheses. Econometrica 57(2):307–333.CrossrefGoogle Scholar
  • Weitzman M (1980) The ratchet principle and performance incentives. Bell J. Econom. 11(1):302–308.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.