Effects of Target Timing and Contract Frame on Individual Performance
| Autor: | Xiaotao Kelvin Liu, Yue (May) Zhang |
|---|---|
| Rok vydání: | 2014 |
| Předmět: |
Economics and Econometrics
Ex-ante business.industry Economics Econometrics and Finance (miscellaneous) Frame (networking) Accounting Peer group Incentive Economics Business Management and Accounting (miscellaneous) Production (economics) Business and International Management business Productivity Finance |
| Zdroj: | European Accounting Review. 24:329-345 |
| ISSN: | 1468-4497 0963-8180 |
| Popis: | This study experimentally examines the effects of target timing and contract frame on individual performance. We study four target-based incentive contracts, categorised by when participants learn the performance target (ex ante, or before production starts, vs. ex post, or after production ends) and how the incentive contract is framed (bonus vs. penalty). The performance target in this study is determined by a peer group's average productivity. We find that performance is significantly higher for bonus-framed contracts when the performance target is revealed ex post, as opposed to ex ante. In contrast, revealing the peer-based performance target ex ante or ex post has no impact on performance for penalty-framed contracts. We also find that the ex post, bonus-framed contract significantly outperforms the other three contracts. This finding supports practitioners' claim that employers should reward (as opposed to punish) individuals based on their performance, relative to that of their peers, ex post. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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