We examine the effects of performance measure properties on incentive system design, using data on incentive contracts for auto dealership managers. The data include information on five properties: two indicators of risk; two indicators of distortion; and one indicator of potential manipulation....

Recent studies have shown that the congruence (i.e. value relevance) of accounting earnings-based measures of performance (e.g., earnings, residual income) has been declining significantly over an extended period of time. We confirm this prior finding, and examine the implications of poor...

Some organizations have abandoned traditional annual budgeting and instead use an alternate approach known as Beyond Budgeting (BB). Our study presents the results of an exploratory analysis comparing 80 organizations that have implemented at least some of the BB practices to a group of 121...

While most performance measurement systems use multiple measures, research on target revision in multi-measure systems is rare. Examining the target-setting practice in such a system, we hypothesize that the performance variances in common and unique measures are differentially informative of an...

This paper reports the findings of an archival and field study that explores the details of the design and functioning of a complex performance evaluation and incentive system, one that bases incentive payouts on both organizational and individual performance ratings. The archival data include...

We examine the extent to which firms use past performance as a basis for setting earnings targets in their bonus plans and assess the implications of such targets for managerial incentives. We find that high-profitability firms commonly reduce earnings targets when their managers fail to meet...