Arnold, Markus; Artz, Martin; Grasser, Robert A. (2023). When Do Firms Adjust Bonus Targets Intrayear? Evidence from Sales Executives’ Targets. Contemporary accounting research, 40(1), pp. 324-355. Wiley 10.1111/1911-3846.12834
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This study investigates when and why intrayear bonus target revisions occur. This is important as intrayear target revisions occur regularly in practice but are not well understood. Specifically, we analyze two potential drivers of intrayear bonus target revisions: reduced managerial incentives owing to managers dropping out of the incentive zone of their piecewise defined bonus function and potential spillovers from planning target revisions that reflect changes in performance expectations during the year. We also investigate the effects of organizational characteristics on intrayear bonus target revisions. Using data collected from sales executives via multiple waves of surveys, we find evidence for both predicted drivers. In addition, consistent with our predictions, we find that the levels of delegated decision authority, intrafirm interdependencies, and information asymmetry negatively moderate the positive association between reduced managerial incentives and revision likelihood. Our paper contributes to the target setting literature by being the first study to
investigate intrayear bonus target revisions and shed light on when firms commit to not revising such targets intrayear.
Item Type: |
Journal Article (Original Article) |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling > Managerial Accounting 03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling |
UniBE Contributor: |
Arnold, Markus Christopher |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
1911-3846 |
Publisher: |
Wiley |
Language: |
English |
Submitter: |
Michelle Buri |
Date Deposited: |
16 May 2023 09:17 |
Last Modified: |
16 May 2023 09:27 |
Publisher DOI: |
10.1111/1911-3846.12834 |
BORIS DOI: |
10.48350/182597 |
URI: |
https://boris.unibe.ch/id/eprint/182597 |
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