Purpose – This paper aims to investigate the ability of performance measurement systems (PMS) that were implemented by headquarters at foreign subsidiaries to influence decisions made by the subsidiary. This is important because PMS are important control mechanisms in the relationship between...

This field experiment investigates how different levels of aggregation in relative performance information (RPI) impact employee performance in environments with multiple tasks. We randomly assign store employees of a retail chain to three groups: RPI on overall performance (control group), RPI...

Using current performance to set future targets can discourage effort and reduce performance. Our study examines whether this ratchet effect also undermines incentives of high-level managers and executives. We use a dynamic model to show that empirical tests used in prior literature can falsely...

This study examines whether introduction of fixed-price regulation influences firms to increase the elasticity of their cost structures and to reduce the asymmetric behavior of cost in response to changes in volume. It also examines variations in the extent of such responses arising from...

We collect detailed survey data on financial managers' annual bonus plans and extensively validate a measure of the willingness to engage in unethical behavior using a panel of 253 respondents. Our main finding suggests that incentives to meet financial targets are positively associated with...