Articles Flashcards
What’s the article “Honesty in budgeting” about?
-Agency theory does not apply, as people are honest and do not lie for their own disadvantage
-Formal control compensates lack of honesty
-Subordinate authority leads to more honest behaviour when factual assertions are made
What’s the article “Basis of incentives” about?
-Firms that implement RI, will improve RI
-When you change vom ROI to RI –> investment decision increases
-RI will decrease incentives to only do incentives in favour of the division - not the company
-When you change from an earning-based compensation plan to RI –> investment decision decreases
-When your performance is measured by earnings, managers accept any investment that increases their earnings
What’s the article “Authority, Risk and Performance Incentives” about?
-Making managers officers is a good incentive
–> higher sensibility of pay to global performance
-Authority over project selection with incentive to maximise firm performance are important to incentivise
-Hierarchy does not influence motivation: decision-making does
-Importance of global measures in determining pay is higher for managers with less authority
-Negative tradeoff between risk and incentives
What’s the article “Performance change with performance-based compensation” about?
-Productivity of old-stay and new-stay exceeds performance of people who leave
-Gradual transition from old, unproductive to new, and productive employee
-Performance improves
-People who stay realize higher productivity gains
-Selection and effort effect –> less production leave
–>employees learn more productive ways to perform tasks
What’s the article “CSR supportiveness and respective framing” about?
-CSR supportive invest more in the “tree” than in the “dollar”
-CSR unsupportive has no difference or even a little less in “tree”
-Level of CSR investment is higher under a non-financial measurement basis than under a financial measurement basis, but only when the manager is personally supportive of CSR
What’s the article “Using budgets for performance evaluation” about?
-Using budgets for performance evaluation and resource allocation eliminates slack
-Increases subordinates effort and task performance
-Sharing information about coworkers can reduce slack when the firm uses budgets for only performance evaluation (not resource allocation)
-Additionally, it will lead to subordinates setting more challenging budgets for themselves, which in return will lead to higher financial budget levels containing less slack
