...Bret Sheeley ABSTRACT Companies are offering managers compensation incentives to increase promotions of under-represented employees to higher level organizational positions (hereafter, “diversity incentives”). This study uses an experiment to examine how diversity incentives affect managers...

...Thomas R. Kubick; John R. Robinson; Laura T. Starks ABSTRACT When determining new equity grants, corporate boards face a tradeoff between the CEO’s incentives generated from the grant’s duration versus those arising from the convexity of the embedded equity risk. We hypothesize and find...

...Steven J. Kachelmeier; R. Alan Webb; Michael G. Williamson ABSTRACT Toward the goal of reconciling conflicting arguments on whether performance-based incentives facilitate or impede divergent thinking, we identify a feature common to prior demonstrations of negative incentive effects...

... that relatively lower performing employees are selected for a promotion is increased. We develop theory about how two important organizational characteristics—transparency about individual performance levels and the presence of group incentives—jointly affect managers’ tendency to strategically influence...

... is associated with higher same-year abnormal earnings but at the same time with lower next-year earnings and stock returns. Combined, our findings suggest that target difficulty is an important incentive design choice that affects performance and executive compensation. Data Availability: Data used...

... should further limit auditors' willingness to exercise skepticism. incentives performance evaluation professional skepticism risk aversion rewards Professional skepticism is fundamental to auditing. However, auditors struggle to properly exercise skepticism despite significant efforts...

...; D83; M40; M52. Given these trends toward transparency and the rise of socially driven organizations, we examine how the effectiveness of leading by example toward a social objective depends on (1) the intensity of variable compensation (hereafter, incentive intensity), and (2) the amount of fixed...

...Pablo Casas-Arce; F. Asís Martínez-Jerez ABSTRACT This paper investigates whether leadership style moderates the effect of leader incentives on the performance of teams. In collaboration with a Latin-American bank, we engineered a field experiment by designing a series of contests among the bank...

... different abilities, an input-based allocation also leads to less effort intensity, defined as puzzles solved per unit of time spent. We attribute these findings to fairness considerations, an interpretation we corroborate in a second experiment with purely individual incentives that finds the same effort...

... Availability: The confidentiality agreement with the company that provided data for this study precludes the dissemination of detailed data without the company's consent. employee compensation incentives bonus penalty prospect theory Humans respond to the prospect of reward, as well as the fear...

... returns: future realized stock returns, errors in forecasting fundamentals, errors in forecasting the expected return to risk, and biases relating to analysts' incentives. Our results suggest that all four sets help explain target price implied returns, with errors in forecasting the expected return...

... forces behind why income smoothing occurs. Editor's note: Accepted by Phillip C. Stocken, under the Senior Editorship of Mark L. DeFond. 12 2018 5 2020 2020 income smoothing incentives contracting L ambert (1984) develops and analyzes a two-period agency model...

... especially thank Amy Tegeler for help running additional sessions. Editor's note: Accepted by Mark E. Peecher, under the Senior Editorship of Mark L. DeFond. November 2015 July 2018 2019 audit quality accountability market structure incentives auditor hiring...

...Jennifer E. Nichol ABSTRACT This study examines the effects of incentive contract framing on misreporting and entitlement. I conduct a 2 × 2 between-subjects experiment, manipulating incentive contract framing (Bonus/Penalty) and the awareness of the opportunity to misreport...

...Steven J. Kachelmeier; Laura W. Wang; Michael G. Williamson ABSTRACT In two experiments, we examine whether performance-contingent incentives facilitate the creative process by enhancing the initial preparation that precedes creative incubation. The defining characteristic of both experiments...

..., in addition to current job RPI, improves the effective sorting of workers, but it comes at the cost of reduced promotion-based incentives. My results suggest that, notwithstanding the benefits documented in previous studies, RPI also imposes potential costs that firms should take into account when deciding...

...Katlijn Haesebrouck; Martine Cools; Alexandra Van den Abbeele ABSTRACT We examine how incentive systems influence knowledge transfer between group members with equal or different status who solve an interdependent task. In our experiment, group members receive group or individual incentives, while...

... contracts with all parties directly or delegates part of the contracting authority to one of the agents. Delegated contracts improve risk sharing and generate implicit incentives for the agent entrusted with contracting authority. However, delegated contracts also entail a loss of control in motivating...

.... The paper contributes to our knowledge of target setting within the context of the budgeting and control process in decentralized organizations. First, it contributes to the literature on the use of information from comparable units in budget-based incentive systems. Previous literature has focused...

... by recording higher operating expenses. We also find that managers have various incentives to manage earnings. Executive compensation is not tied to firm performance in the transition period as it is in adjacent fiscal years. Growth firms, firms with poor stock returns, and firms with weak external...