Identity, incentives and the value of information

Heinle, Mirko Stanislav; Hofmann, Christian; Kunz, Alexis H. (2012). Identity, incentives and the value of information. The Accounting Review, 87(4), pp. 1309-1334. American Accounting Association 10.2308/accr-50156

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We examine the impact of identity preferences on the interrelation between incentives and performance measurement. In our model, a manager identifies with an organization and loses utility to the extent that his actions conflict with effort-standards issued by the principal. Contrary to prior arguments in the literature, we find conditions under which a manager who identifies strongly with the organization receives stronger incentives and faces more performance evaluation reports than a manager who does not identify with the organization. Our theory predicts that managers who experience events that boost their identification with the firm can decrease their effort in short-term value creation. We also find that firms are more likely to employ less precise but more congruent performance measures, such as stock prices, when contracting with managers who identify little with the organization. In contrast, they use more precise but less congruent measures, such as accounting earnings, when contracting with managers who identify strongly with the firm.

Item Type:

Journal Article (Original Article)


03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling > Financial Accounting

UniBE Contributor:

Kunz, Alexis H.


600 Technology > 650 Management & public relations




American Accounting Association




Beda Scherrer-Schweizer

Date Deposited:

24 Jan 2014 18:16

Last Modified:

04 Mar 2014 09:57

Publisher DOI:



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