Despite the frequent use of relative performance information (RPI) feedback in practice, there is a paucity of research on the extent to which discretionary use of RPI can influence employees' creative problem-solving performance. Using the experimental method, we study how variations in the completeness of public RPI affect individual performance on an insight task. We consider three levels of RPI completeness: complete, partial, and none. In complete RPI, all employees' performance is ranked and publicly disclosed; in partial RPI, only top-ranking employees are publicly announced; and in no RPI, no ranking feedback is provided. Drawing on regulatory focus theory, we expect and find that partial RPI leads to higher creative problem-solving performance than complete RPI or no RPI at all. Implications for creative problem-solving and the RPI literature are discussed.
We analyze the effects of introducing formal controls to communicate and reinforce corporate values among incumbent workers. Using data from a retail chain, we examine the intervention's impact on variables capturing behaviors consistent with those values. The intervention's effectiveness exhibited significant variation. Specifically, we find it to be more effective in stores with greater promotion opportunities-consistent with the system motivating increased effort where implicit incentives are stronger-and in stores with managers who had experience related to the implementation of the promoted values-consistent with the system benefiting from skills and expertise necessary for acting on core values. However, the intervention was counterproductive along various dimensions where leadership's actions were likely to be perceived as inconsistent with the espoused values. Our findings highlight important factors for instilling core values via formal management controls.
This article follows the Lifetime Achievement Award conferred on Professor David Otley by the American Accounting Association's Management Accounting Section in January 2026. Drawing on a close reading of Otley's extensive body of published work, the article reflects on the intellectual foundations, distinctive qualities, and enduring impact of his contribution to management accounting research. Inspired by Otley's own articulation of eight desirable attributes of research-incremental, interpretive, integrated, inclusive, international, imaginative, interesting, and influential-we illustrate how these principles were consistently embodied in his scholarship over five decades. Through selected exemplars, the article shows how Otley's work combined conceptual rigor with empirical richness, methodological openness, and sustained engagement with practice. In doing so, it highlights the coherence, relevance, and lasting influence of his research agenda, and underscores the ways in which his ideas continue to shape contemporary debates and inspire new generations of scholars.
Responding to unexpected operational disruptions is a major challenge for many firms. We examine whether firms stockpile inventory in response to exposure to operational disruption uncertainty induced by COVID-19 lockdowns. We find that firms that have been more significantly affected by lockdowns experience a greater increase in their inventory holdings. We further find that supply risk, logistics dependence, and customer retention concerns amplify post-lockdown inventory increases, whereas operational flexibility attenuates them, suggesting that COVID-19 lockdowns increase the expected disruption risk and thereby induce firms to increase inventory holdings. We also find that post-lockdown inventory stockpiling leads to higher inventory write-downs and worse operating performance. Our findings are unlikely to be driven by demand declines or stockout costs.
Organizations strive to enhance organizational creativity (OC). Understanding the conditions under which CEO creativity is associated with OC is important for designing effective control systems. We theorize that the interactive use of management control systems (MCS) may moderate the association between CEO creativity and OC. We further propose that family firm status may strengthen this moderating effect. Drawing on survey data from 112 Danish small-and medium-sized enterprises (SMEs), we show that CEO creativity is positively associated with OC and that this association is stronger when the interactive use of MCS is high. In addition, the complementarity between CEO creativity and the interactive use of MCS is more pronounced in family firms than in non-family firms. These findings suggest that organizations can leverage the interactive use of MCS to strengthen the association between CEO creativity and OC, with particular benefits in family firm contexts.
This study examines how employees respond when they become aware that their firm engages in opportunistically motivated selective corporate social responsibility (CSR) disclosure. Employees' proximity to CSR initiatives enables them to detect disclosure selectivity and form inferences about the firm's underlying motive for engaging in such disclosure. Drawing on social norm theory, I predict and find that employees misreport performance to the firm and shirk in a joint task with a peer to a greater extent when selective disclosure is perceived as opportunistically motivated. Awareness of selectivity alone is insufficient to trigger these responses. These findings highlight the central role of perceived motive in making an opportunism norm salient and demonstrate that motive-based norm salience produces behavioral spillovers across contexts. Overall, the results show that opportunistically motivated CSR disclosure can backfire internally by harming both firms and peers.
We conduct two experiments to examine budget reporting in hierarchical work settings (owners, managers, and employees) under nonremote and remote conditions, respectively. We investigate employees' and managers' reporting behavior when managers have the authority to approve or reject employees' budgets. We predict and find that the presence of budget approval authority increases employees' honesty in both nonremote and remote environments. More importantly, exercising this authority has no significant impact on managers' own honesty in nonremote settings but increases managers' honesty in remote environments due to their enhanced empathy toward owners. Supplemental data further support our theory, suggesting that exercising approval authority leads to a higher level of affective empathy, which in turn increases managers' honesty in remote environments. We discuss the implications of our findings for both research and practice.
We investigate via an experiment how two features of recognition programs influence how employees respond to recognition: (1) whether employees anticipate (i.e., are aware of) the potential for recognition and (2) the recognition source. We predict and find that the effect of recognition anticipation is moderated by the source of recognition, such that employees who receive unanticipated recognition from their direct manager will respond by exerting reciprocal effort to a greater extent than when recognition is anticipated and/or provided by the broader firm. Further, such effects occur even when recognition is relatively mundane such that the potential for recognition does not influence employees' pre-recognition effort. Our study highlights the importance of considering effects of firms' recognition system design choices on both "sides" of the recognition event (i.e., pre-and post-recognition). Further, our results inform firms' recognition system design choices and highlight the potential for employees' dysfunctional response to recognition.
In this study, I investigate the impact of visually highlighting specific information in job advertisements on the number of applicants and the composition of the applicant pool. In collaboration with a recruiting service provider, I conducted field experiments with job ads from over 40 firms on social media platforms where potential candidates see job ads that highlight working-from-home options, flexible working hours, or no job characteristic. Using the results from 3,348 applications for 176 ads, I find that highlighting either of these flexible work options, compared with not highlighting any job characteristic, significantly increases the number of applicants. Additionally, an analysis of the applicant pool shows that the share of female applicants is higher when flexible working hours are highlighted. Finally, I do not find evidence that visually highlighting either flexibility option reduces applicant quality, measured in terms of candidate-job fit, or continuation in the application process.
This study investigates how an enabling performance measurement system (PMS) shapes the curvilinear relationship between budget-goal difficulty and managerial performance. We distinguish between two core design principles of enabling PMSs-adaptability (an integrated concept combining repair and flexibility) and transparency (internal and global transparency)-and theorize that they play distinct roles. Based on survey data from 495 Japanese middle managers, we find a curvilinear relationship between budget-goal difficulty and managerial performance. More importantly, we uncover the contingent nature of enabling PMSs. Adaptability moderates this curve in a complex manner: under high adaptability, performance peaks with moderately difficult goals but declines sharply when goals become excessive. Additionally, transparency was found to have a direct effect on managerial performance. Our findings contribute to the literature by demonstrating that the design elements of enabling PMSs are not universally beneficial; their effectiveness, particularly that of adaptability, is contingent on the level of goal difficulty.
This study examines whether nonfinancial rewards are used to facilitate organizational change during outsider leadership transitions. Outsider leaders frequently introduce significant change, risking disruptions to the psychological contract between employees and their organization. Using data from surveys and an archival database, we first present evidence that the appointment of outsider leaders brings about a period of significant change. Next, we find that outsider leaders are more likely to use nonfinancial rewards than insiders to recognize employees who perform below their expectations. When examining the broader employee population, we also find that outsider leaders make greater use of nonfinancial rewards compared to insiders. Finally, we find that the use of nonfinancial rewards by outsider leaders to reward employees who performed below expectations has an inverted U-shaped relationship with employee perceptions of their leader's ability to manage change. These results highlight the value and limits of nonfinancial rewards in facilitating organizational change.
This study investigates how budgeting is associated with lower employee turnover intentions. We argue that the extent to which budgeting is perceived by employees as enabling will be directly associated with higher levels of perceived organizational support that result in lower turnover intentions. We also expect that enabling budgeting will be associated with perceived organizational support by promoting an error management climate that encourages employees to openly discuss and correct errors while discouraging an error aversion climate where errors are suppressed. Using survey data from 213 respondents, we find that enabling budgeting is positively associated with perceived organizational support and negatively associated with turnover intentions through higher levels of error management climate and lower levels of error aversion climate. Our findings contribute to research and practice by identifying how budgeting shapes organizational support and error climate perceptions, resulting in lower turnover intentions. Data Availability: Survey data collected are available from the authors upon request.
Today's working environment is shaped by two megatrends: telecommuting and surveillance. Although both are widespread in practice, research on how an employer's decision to allow or deny telework affects employee behavior and interacts with monitoring remains scarce. In an experiment, we examine employees' effort and misreporting as responses to employer-assigned work location. We focus on a setting that allows employees to reciprocate for the employer's decision to allow telecommuting (or not) and to use monitoring (or not). Consistent with our predictions, employees assigned to telework exhibit greater effort and misreport less than those assigned to office work. A path analysis and results from a follow-up study reveal the role of reciprocity. Moreover, we find that monitoring leads to a greater reduction in effort and misreporting when employees are assigned to office work compared with telework. Our study provides important implications for the design and implementation of management control systems.
We study whether pay-to-quit incentives (i.e., payments offered to employees who resign) can help organizations maintain a workforce of employees who highly identify with the organization. Across a laboratory experiment and an online vignette experiment, we find that pay-to-quit incentives induce employees with lower levels of organizational identification (OI) to leave their organization. Employees with low (high) OI are generally likely (unlikely) to leave the organization regardless of whether a pay-to-quit incentive is offered. As a result, relative to no incentive, the effect of a pay-to-quit incentive on employees' likelihood of leaving is strongest among employees with moderate OI. We also find that employees who forgo the pay-to-quit incentive subsequently exert higher work effort than before. This research contributes to the rising accounting literature on the sorting effects of incentives by showing that pay-to-quit incentives both help retain highly identified employees and motivate those who remain.
Peer evaluation systems are becoming increasingly important in firms. We experimentally investigate whether and how anonymity when evaluating peers (no versus yes) influences how employees evaluate their peers when an incentive is linked to peer evaluations (no versus yes) and whether these factors distort evaluations. We argue that, according to self-efficacy theory, the economic and psychological costs and benefits vary depending on both factors. As predicted, we find that in the absence of incentives, evaluations are upwardly distorted, particularly when employees are not anonymous. Anonymity reduces these upward distortions. In contrast, when incentives are present, anonymity leads to downward distortions, which are mitigated when evaluations are not anonymous. Our results inform managers about the contradictory effects of anonymity depending on the incentive scheme utilized and their impacts on the extent of peer evaluation distortions.
Using unique data from Korea's central government departments, we examine how past spending variance influences governmental budgeting. Because department budgets are generally revised based on past spending variance, we predict that these adjustments are likely influenced by the direction of spending variance and the severity of agency problems. Consistent with our prediction, we find that fiscal authorities tend to increase (decrease) budgets of departments with low agency concern to a greater (less) extent following overspending (underspending), leading to more resource allocation. This asymmetric budget revision pattern contrasts with departments with high agency concern, where budgets are symmetrically adjusted following both overspending and underspending. Our findings are robust to employing various proxies of agency problems, including departments' organizational integrity, monitoring intensity, and corruption records. Overall, our results support the view that fiscal authorities' perception of agency concerns shape how they interpret and use past spending variance as signals in governmental budgeting.
Firm policies for whether or when to disclose specific targets used in executive incentive plans vary significantly. Ex ante disclosure (made before performance is realized) arguably facilitates shareholder monitoring. However, the practice may reduce contracting flexibility by making it more difficult for boards to make payout adjustments ex post. Using hand-collected target disclosure dates, I examine whether disclosure timing varies with demand for compensation flexibility. Consistent with my hypothesis, I find that firms are less likely to disclose longterm targets ex ante when operating environments are uncertain, shareholder attention on compensation is stronger, and contract formulas are more detailed. I do not find evidence to suggest that firms avoid ex ante disclosure to facilitate rent extraction or mitigate proprietary costs from disclosing forward-looking information. Overall, my findings support arguments that flexibility can be an important tool in efficient contracting and suggest that disclosure discretion may help facilitate flexible contracts.
Employees who have contact with outside customers may obtain private information from these customers, and they may also adapt rules to meet customer demands. This increases information asymmetry between the employees and their supervisors, complicating supervisor control. However, customer contact may also reduce information asymmetry: Customer information may be used by supervisors, whereas customers may have a disciplining effect through increasing employees' felt accountability and motivation. In a sample of 516 employee-supervisor relationships, I find a negative relationship between outside customer contact and both employee and supervisor assessment of information asymmetry. These relationships are more negative when supervisors and employees are less experienced. Additional analyses show that the relationship is less negative in not-for-profit organizations, where clients typically are less powerful. The results are consistent with outside customers having a disciplining function rather than being a source of private information, and more so when supervisor monitoring is less effective.
Targets are a central component of management control systems and are widely used to direct employee attention and motivate their effort. Accounting research has largely validated the performance-enhancing effects of targets, especially when linked with rewards. However, unique and dynamic institutional features differentiate accounting settings from those examined elsewhere. In this introduction, we introduce the articles appearing in the Journal of Management Accounting Research special forum on target setting in management accounting. We then highlight five promising directions for future accounting research: (1) target pursuit in teams, (2) remote and AI-supported target setting, (3) targets and affect, (4) neurophysiological research on targets as goals, and (5) field experiments on targets. Together, we hope this article can inspire future research aimed at advancing theory and informing practice around targets.
This acceptance speech for the Lifetime Contribution to Management Accounting Award celebrates the AAA Management Accounting Section, reflects on the progress of the Journal of Management Accounting Research, explores Boyer's four dimensions of scholarship (Boyer 1990), and invites scholars of management accounting to engage with professional organizations to pursue management solutions that matter in people's lives.
