This paper examines how performance reporting aggregation and frequency affect confirmation bias in subjective performance evaluations. In our first experiment, we predict and find that supervisors’ evaluations of current-period performance details are highly influenced by the employee’s performance reputation (i.e., confirmation bias). However, this effect is mitigated when supervisors see summary metrics alongside the performance details. In our second experiment, we test whether summary metrics mitigate the confirmation bias in a setting where supervisors see detailed information as it becomes available during the period (i.e., frequent reporting) and only see summary metrics at the end of the period. We find that summary metrics do not mitigate the confirmation bias in this frequent reporting setting. Our results suggest that summary metrics reduce confirmation bias only when evaluators see them before or at the same time as the detailed information, rather than after they have already processed the details. Our results contribute to theory and provide the practical implication that managers could look at aggregate information before delving into the details if they wish to be less affected by previously held beliefs.
Managers’ forecasts about future sales are at the core of managerial decision-making. Using a monthly business survey, we study managers’ directional sales forecast accuracy three months ahead. Managers incorrectly predict the direction of sales changes in 42 % of their forecasts. In exploratory analyses, we find that firms with better educated and more tenured CEOs make better forecasts. In our main analyses, we investigate how sales forecast accuracy is related to adjustment costs. We find that SG&A costs increase less per dollar of sales increase in firm-years with high accuracy. The results hold after controlling for different proxies related to long-term cost structure. Accordingly, the empirical evidence is consistent with the explanation that our findings primarily reflect short-term dynamics, wherein SG&A expenses rise disproportionately when firms must make ad hoc adjustments in response to unexpected changes in sales. When focusing on within-firm variation of forecast accuracy, the associations with adjustment costs are only significant for firms with low average accuracy. Additional cross-sectional analyses are consistent with the interpretation that forecast accuracy matters more for larger firms and firms with higher demand volatility. Finally, firms with higher forecast accuracy have a lower cost-to-sales ratio and higher gross profit margins.
Tracing firm-level performance outcomes back to the activities of specific managers or organizational functions facilitates the creation of goal-congruent accountability within an organization. However, it may also lead to tensions between organizational actors when these compete for demonstrating ‘their’ performance. Drawing on interviews with marketing managers from across different firms and sectors, we examine how the tracing work through which these managers attempt to link marketing performance to revenues can create micro-political tensions in their organizations. We first show that marketing managers see tracing as a potential solution to concerns about their functional reputation and status and how they engage in tracing work to demonstrate their contribution to overall firm performance. We then explain how this tracing work triggers two types of micro-political tensions with the sales department: tensions related to ‘ownership’ of customers and customer revenues; and tensions related to the organization of work and how data should be collected and shared. Finally, we discuss the tactics that marketing managers use to overcome these tensions. With these findings, our paper contributes to a better understanding of the micro-political nature of performance measurement and tracing.
This study examines how performance measurement and management systems (PMMS) function under theocratic governance where competing orders of worth are incommensurable. Drawing on Boltanski and Thévenot's Orders of Worth (OW) framework, the paper analyses how PMMS operate not as mediators of compromise but as arenas where entrenched asymmetries of power and governance become visible. A qualitative case study of the National Iranian Oil Company (NIOC), based on interviews, field observations, and organisational documents, explores the coexistence of two parallel evaluation regimes: an HR-led system emphasising industrial and market worths, and a Herasat-led system privileging religious and ideological compliance. The faith-based justifications underlying the Herasat-led system are provisionally interpreted through domestic and civic worths; however, they reflect a distinct theocratic moral grammar that only partially aligns with the original framework. The findings show that when HR's KPI-driven assessments conflict with Herasat's faith-based vetting, the latter routinely prevails, producing cycles of veto and renegotiation. The study makes two main contributions. First, it examines the application of the OW framework in an authoritarian, theocratic context, showing how certain orders of worth become structurally institutionalised as dominant veto powers, thereby precluding compromise. Second, it qualifies prior work by demonstrating that under conditions of entrenched asymmetrical power, PMMS may not enable compromise but instead expose and intensify conflict. These insights highlight the role of PMMS in reinforcing exclusion and state ideology in politically charged environments.
Corporate social responsibility (CSR) has been interpreted as a financial insurance tool, yet its effectiveness remains debated. Not all stakeholders exert comparable influence on firm performance, raising questions about when and for whom CSR acts as an effective insurance mechanism during crises. While prior studies differentiate between primary and secondary stakeholders, we argue that stakeholder influence, rather than stakeholder type, determines CSR’s insurance effect: CSR protects firm value when it is aligned with the claims of influential stakeholders rather than non-influential ones. In contrast to prior studies that focus on firm-specific crises such as corporate misconduct, we examine the less studied role of CSR as an insurance against exogenous shocks. We test our arguments using the exogenous market shock induced by Covid-19, leveraging a difference-in-differences design. We find that companies with salient CSR activities related to influential stakeholders have better financial performance, in terms of risk and return measures, during the crisis compared to firms whose salient CSR is concentrated on non-influential stakeholders. Notably, companies focusing their CSR activities on influential stakeholders are the only ones that do not experience a significant decline in stock returns during the market crash.
Using three experiments, I investigate whether increasing reporting frequency affects supervisor evaluation decisions and employee exploration in a discretionary evaluation setting. Employees learn by either exploring new knowledge or exploiting existing knowledge. Supervisors may be unable to distinguish exploration from shirking as the cause of low results because exploration frequently produces low outcomes. Anticipating this, employees can explore below optimal levels because they are uncertain whether supervisors will reward unsuccessful exploration. Increasing reporting frequency, defined as providing supervisors with more timely and detailed information, improves supervisors’ ability to distinguish exploration from shirking. Thus, consistent with my prediction, I find that supervisors award bonuses that provide stronger incentives for employees to explore when reporting frequency increases. Contrary to my prediction, employees do not appear to anticipate this and do not explore more when reporting frequency increases. My results suggest employees can fail to anticipate which actions supervisors will reward, making supervisors less effective at directing employee effort toward desirable actions.
This paper investigates how accounting inscribes and mediates credit risk in the banking sector. Drawing on a qualitative case study of a systemically important financial institution in Scandinavia, we examine how a forward-looking risk metric, Probability of Default (PD), mediates across multiple calculative practices, including financial reporting under IFRS 9, loan approval, credit assessment, performance evaluation, and risk-based pricing. Building on the accounting and risk management literature, the paper explores how regulatory demands for risk quantification are enacted in ways that simultaneously support regulatory compliance and organizational risk management. We contribute by demonstrating how PD operates as a mediating instrument that coordinates financial reporting and management control by enabling comparison, inducing selectivity, and structuring evaluative discussions across organizational domains. Rather than opposing risk measurement and risk envisionment as distinct calculative cultures, we show that mediation unfolds along a continuum of calculative practices, as PD provides an actionable representation of credit risk.
Research on accounting mediation shows that the design of accounting tools can facilitate the way organizational actors reflexively mediate multiple, competing concerns. However, research has yet to fully account for how actors exercise discretion in process of accounting mediation. Motivated by insights from activity theory, this study examines how accounting mediation unfolds through actors’ discretionary engagement with tools, and the conditions that enable such discretion. Empirically, we conducted a case study of risk management in a public health surveillance agency in Brazil, focusing on how managers use inspection checklists to mediate institutional and local concerns. Our analysis shows that managers successfully navigate these different and sometimes competing concerns by switching between three distinct mediation pathways: anchoring assessments in standardized risk evaluations, complementing these evaluations with benefit-based considerations, and suspending risk metrics when competing assessments become incommensurable. Switching between these pathways allows managers to balance the credibility of a standardized risk system with the need for contextualized judgment. Based on these findings, we make three contributions. First, we theorize “switching” as a central mechanism of accounting mediation, highlighting the conditions under which actors exercise discretion and make reflexive choices about how and when to pursue different forms of mediation. Second, we add to prior research on the reflexive uses of accounting by showing how reflexivity emerges from continuous acts of combining tools to reconcile multiple accountings, rather than episodic acts of discretion spurred by individual sensibilities and material arrangements. Third, we foreground the checklist as a distinct accounting tool, showing how listed accounts of risk acquire mediating capacity through actors’ situated engagement with them.
This commentary examines how GenAI can meaningfully augment qualitative management accounting research while requiring careful alignment with researchers' epistemological commitments. Contrasting interpretive and positivist traditions across research design, data collection, analysis, and writing, we critically examine opportunities - including scaling interviews, generating AI-created vignettes, real-time interview augmentation, and using AI to systematically challenge emerging interpretations. We also draw attention to two less obvious methodological risks. First, because GenAI generates outputs by modelling statistical regularities in large-scale textual corpora, its unreflective use may orient analysis toward surface patterns and apparent consistencies, thereby silently introducing assumptions of stability and generalisability into traditions that prioritise situated meaning, process, and context. Second, delegating core activities such as interpretive analysis or writing to AI may lead scholars to forgo the generative "struggles" through which qualitative insight typically crystallizes. We conclude that GenAI can have a legitimate role in qualitative management accounting research, but the risks call for deliberation, reflexivity, and transparency.
This paper investigates the impact of performance objectives and, more specifically, time management, on intimate spaces in the workplace, focusing on access to toilets for train drivers working for the French public railway company, SNCF. Despite the existence of legal obligations, heightened operational performance expectations result in limited access to toilets for certain occupations, obliging employees to resort to makeshift solutions. Drawing on a discontinuous three-year institutional ethnography (Smith, 1987) conducted in liaison with labour unions, we analyse the embodied impact of a new punctuality policy at SNCF, introduced alongside budget cuts and increasing market competition. Using insights from critical geography, we examine how this policy affects relationships between workers, their bodies, and their workspace. We show that performance policies restrict both material and temporal access to toilets, compelling drivers to regulate their bodily needs in order to comply with organisational expectations. We identify the accounting dimensions of intimate spaces at work and advance two conditions governing access to such spaces and two governing their use. Finally, we argue that accounting practices, which currently largely overlook intimate spaces, should consider workers’ bodies in their material and temporal contexts, thereby fostering greater worker dignity.
To make informed voting decisions, shareholders need clear and detailed information about compensation schemes disclosed in firms' proxy statements. When the Securities and Exchange Commission (SEC) identifies deficiencies in these disclosures during its review process, it issues comment letters to the firms. In response, nearly all firms revise or amend their compensation disclosures. This study examines whether addressing such deficiencies affects subsequent say-on-pay (SOP) voting outcomes. The findings indicate that investors are more likely to support management SOP proposals following the SEC review. Further analysis suggests that the observed impact likely arises from both improved disclosure and changes in compensation policies.
Employees increasingly operate in multi-task environments, managing both routine responsibilities and non-routine tasks, such as developing creative ideas. While employees’ creative ideas can be very valuable for firms, resource constraints often entail that managers need to provide negative outcome feedback in the form of a rejection of an employee’s proposed creative idea. This may have unintended consequences beyond the creative context in which it occurs. Drawing from reciprocity literature, we develop and test theory suggesting that when employees receive such negative outcome feedback on a creative, non-routine task, this spills over and increases employees’ misreporting on a routine task. However, this negative spillover effect can be mitigated when managers provide explanatory feedback in addition to the outcome feedback. Evidence from a laboratory experiment as well as a supplemental scenario experiment supports our predictions. Consistent with our theorized argument, additional analyses also show that these effects are driven by employees’ kindness evaluations. Our findings contribute to the misreporting literature by documenting the effects of feedback in multi-task environments and offer practical guidance for managers in identifying situations in which explanatory feedback is particularly beneficial.
Prior research has framed management accountants' professional hybridization as an individual transformation of roles and identities. However, this perspective does not capture the broader social context and dynamic nature of management accounting work, especially when environmental sustainability demands are integrated into the professional roles of management accountants. Our study leverages paradox theory to examine the tensions faced by management accountants in Swedish energy-intensive companies when incorporating environmental sustainability demands into their work on this transformation. Using a qualitative research design, we identify and link two paradoxes-the sustainability-profit paradox and the engineer-accountant profession paradox. Additionally, we reveal four response patterns management accountants adopt when experiencing and navigating these paradoxes. Our findings contribute to the literature on the professional hybridization of management accountants by demonstrating how organizational, and interprofessional paradoxical tensions co-create their professional role. They reinforce the view of professional hybridization as a socially embedded phenomenon and highlight the agentic potential of management accountants in navigating these tensions.
Organizations are increasingly turning to sustainability-oriented innovation (SOI) to address pressing environmental and social challenges, yet implementation remains fraught with difficulties. Unlike incremental sustainability efforts, SOI embeds sustainability objectives into the core of innovation processes, encompassing products, services, and business models. This study investigates how the adaptation of management control systems (MCSs) enables the implementation of SOI. Drawing on a case study of a Scandinavian polyethylene-packaging firm responding to the European Union’s plastic ban by shifting to bio-based and recycled materials, we trace the firm’s rapid implementation of an SOI strategy. Leveraging Tessier and Otley’s (2012) refinement of Simons’ (1995) levers-of-control (LOC) framework, we show how the firm navigated distinct phases of SOI implementation by alternating between strategic and operational levels of control. Rather than developing entirely new control mechanisms, the firm adapted existing ones—a process we term plasticity, defined as the capacity to repurpose controls without altering their formal design or structure. This study advances research on management control for sustainability by introducing MCS plasticity as a key enabler of SOI and by demonstrating the analytical value of the revised LOC framework for examining complex sustainability transitions.
We conducted a field experiment to compare the effects of financial performance pay and monetary gifts on employee performance. We randomly assigned store managers at a German discount supermarket chain to receive either performance pay based on profit increases or an unconditional gift in the form of a lump-sum payment. Our findings indicate that, on average, performance pay significantly outperformed gifts, yielding profit increases of approximately 8 %. However, managers' base wages appear to moderate the effectiveness of performance pay versus gifts. Performance pay appears to have a stronger performance effect for managers with higher wages. In contrast, for gifts, we find tentative evidence of a stronger effect at lower wages. We argue that the effectiveness of both incentives depends on a reference point defined by the desired bonus-to-wage ratio (i.e. performance-pay-to-wage or gift-to-wage ratio). For performance pay, which can vary based on effort, higher-wage managers must exert more effort to meet this ratio. For gifts, which are fixed amounts, lower-wage managers may perceive the same bonus as more generous, which can strengthen reciprocity.
We propose an alternative approach to quantifying a firm’s value-based management (VBM) sophistication. The approach uses natural language processing (NLP) and builds on a newly developed, customised dictionary. We describe the development of this dictionary and validate the resulting measure for a large sample of European listed firms (STOXX Europe 600 Index) using tests of internal consistency, construct validity, and relevant robustness checks. In doing so, we present a novel application of NLP in management accounting. We also contribute a customised, open-source dictionary for the measurement of VBM sophistication thereby creating opportunities for future research.
We examine how companies in China manage labour resources through sales upturns and downturns. We argue that managers make implicit commitments to retain some employees through downturns based on the nature of activities the employees engage in. We predict higher commitment in contracting (more stickiness) for employees who accumulate intangible asset value and engage in other long horizon activities. We associate employees with three primary business activities: sales and marketing (S&M), accounting and financial management (A&F) and production and operations (P&O). Employees in S&M acquire product knowledge and build relations with customers that benefit the firm over time. Employees in A&F combine professional skills with knowledge of the firm to support current operations and plan for future demand. Employees in P&O apply general and firm-specific skills to service current production and sales. We discriminate between state-owned enterprises (SOEs) and non-SOEs in our analysis. For SOEs, there is stickiness in labour adjustment across all activities, consistent with political employment objectives of SOEs. For non-SOEs, firms add more employees for S&M and A&F when sales increase than they remove when sales decrease but adjustments to labour for P&O activities are symmetric with respect to increases and decreases in sales.
Workers' learning, and attempts at learning, affect their current and future performance. However, attempts at learning and learning likely differ across operational settings. We experimentally examine how a setting with a within-domain task change, relative to a setting where the same task continues over time, affects these elements. We further examine how the form of compensation contract moderates this effect. We find that, relative to a continuing task setting, a within-domain task change decreases (increases) current (future) period performance, consistent with increased attempts at learning in the current period. The reduction in current performance from a within-domain task change is amplified for performance-based (piece rate or relative performance) contracts relative to flat wages. However, attempts at learning fail to improve future performance following a within-domain task change under piece rates. Our results suggest that firms should consider the task horizon, job environment, and importance of learning when designing contracts.
We examine the association between an "off-the-job" CEO characteristic-masculinity-and firm cost behavior. First, we analyze cost elasticity, defined as the responsiveness of costs to changes in sales volume, and find that masculine CEOs tend to be associated with firms with more elastic cost structures, characterized by a lower proportion of fixed costs. Second, we investigate cost stickiness, a phenomenon in which expenses decline less during sales downturns than they rise during periods of sales growth. Our evidence suggests that masculine CEOs are associated with lower cost stickiness, potentially leading to underinvestment due to aggressive cost-cutting in response to declining sales. These cuts often concentrate on non-value-enhancing expense categories. Finally, we find that masculine CEOs engage more in real earnings management through their influence on costs, reflecting an "achievement drive" incentive. This study adds to the broader understanding of how CEO personal characteristics shape firm-level operational decisions and financial outcomes.
