TY - JOUR
T1 - Knowing that you know
T2 - incentive effects of relative performance disclosure
AU - Casas-Arce, Pablo
AU - Deller, Carolyn
AU - Martínez-Jerez, F. Asís
AU - Narciso, José Manuel
N1 - Funding Information:
We thank Russell Lundholm (editor), an anonymous referee, Brad Badertscher, Alexander Brüggen, Barbara Fick, Mirko Heinle, Glen Kobussen, Peter Kroos, Michal Matejka, Sebastián Ruiz, and workshop participants at Harvard Business School, the University of Notre Dame, the AAA Management Accounting Section Midyear Meeting, the AAA Annual Meeting, the EAA Annual Meeting, the EIASM Workshop on Accounting and Economics, and GMARS for helpful comments and suggestions.
Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.
PY - 2023/3
Y1 - 2023/3
N2 - This paper studies differential employee responses to the public disclosure of individual performance information throughout an organization. We argue that, to the extent that employees care about their colleagues’ perceptions of their productivity, public disclosure will increase motivation. Moreover, the effect should be stronger for employees whose colleagues expect them to have higher performance. We obtained data from a bank that transitioned from private to public disclosure of employee rankings and, consistent with our hypothesis, find heterogeneity in employee responses to public disclosure. Employees with a history of poor performance increase their output more than past good performers when rankings become public. Additionally, more highly educated employees react more strongly to the change. However, contrary to the literature that finds gender differences in competitive environments, we do not find systematic differences in the response to public disclosure on this dimension. Overall, the results suggest that public disclosure is an important dimension to consider when designing a compensation system.
AB - This paper studies differential employee responses to the public disclosure of individual performance information throughout an organization. We argue that, to the extent that employees care about their colleagues’ perceptions of their productivity, public disclosure will increase motivation. Moreover, the effect should be stronger for employees whose colleagues expect them to have higher performance. We obtained data from a bank that transitioned from private to public disclosure of employee rankings and, consistent with our hypothesis, find heterogeneity in employee responses to public disclosure. Employees with a history of poor performance increase their output more than past good performers when rankings become public. Additionally, more highly educated employees react more strongly to the change. However, contrary to the literature that finds gender differences in competitive environments, we do not find systematic differences in the response to public disclosure on this dimension. Overall, the results suggest that public disclosure is an important dimension to consider when designing a compensation system.
KW - Public disclosure
KW - Relative performance information
KW - Tournaments
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U2 - 10.1007/s11142-021-09636-2
DO - 10.1007/s11142-021-09636-2
M3 - Article
AN - SCOPUS:85119887320
SN - 1380-6653
VL - 28
SP - 91
EP - 125
JO - Review of Accounting Studies
JF - Review of Accounting Studies
IS - 1
ER -