Ratcheting and the Role of Relative Target Setting

2014 ◽  
Vol 89 (4) ◽  
pp. 1197-1226 ◽  
Author(s):  
Carmen Aranda ◽  
Javier Arellano ◽  
Antonio Davila
Keyword(s):  
Data Availability ◽  
Past Performance ◽  
Target Setting ◽  
Performance Targets ◽  
Setting Process ◽  
Other Information ◽  
Absolute Magnitudes ◽  
Using Data ◽  
Individual Information

ABSTRACT: Managers use a variety of information to set performance targets. Using data from 376 branches of a large travel retailer over five years, this study documents supervisors considering the relative performance of comparable units in target setting, which we term relative target setting (RTS). We find evidence of RTS after controlling for individual past performance in the form of ratcheting. Our findings also indicate that RTS partially shapes the use of other information on past performance. Specifically, we find that the magnitude of ratcheting decreases (increases) with RTS for favorable (unfavorable) performance variances, and the asymmetry of ratcheting characterized by different ratcheting coefficients for unfavorable than for favorable variances is significant for large absolute magnitudes of RTS. Managers use the flexibility associated with the subjectivity of the target-setting process to weight peer and individual information differently across different units. Data Availability: The data used in this study cannot be made publicly available due to confidentiality agreements with the participating organization.

Performance Target Revisions in Incentive Contracts: Do Information and Trust Reduce Ratcheting and the Ratchet Effect?

2015 ◽  
Vol 90 (5) ◽  
pp. 1755-1778 ◽  
Author(s):  
Jasmijn C. Bol ◽  
Jeremy B. Lill
Keyword(s):  
Structural Changes ◽  
Data Availability ◽  
Performance Information ◽  
Ratchet Effect ◽  
Past Performance ◽  
Performance Targets ◽  
Positive Performance ◽  
Confidentiality Agreement ◽  
To Receive ◽  
Performance Target

ABSTRACT In this study, we examine a setting where principals use past performance to annually revise performance targets, but do not fully incorporate the past performance information in their target revisions. We argue that this situation is driven by some principals and agents having an implicit agreement where the principal “allows” the agent to receive economic rents from positive performance-target deviations that are the result of superior effort or transitory gains by not revising targets upward, while the agent “accepts” target revisions by not restricting output when these revisions are the result of structural changes in the operation's true economic capacity. Although both the principal and the agent can benefit from an implicit agreement, we argue that for the implicit agreement to be maintainable, the principal either needs information on the cause of the performance-target deviation or there needs to be trust between the principal and the agent. Using archival data across multiple years and independent bank units, we find a pattern of ratchet attenuation and output restriction that is consistent with the existence of implicit agreements for those principal-agent dyads where information asymmetry is sufficiently reduced or mutual trust exists. Data Availability: Data used in this study cannot be made public due to a confidentiality agreement with the participating firm.

Methods for Target-Setting and Rule Compliance in Automotive Engineering

2003 ◽  
Author(s):  
Paul Lomangino ◽  
Kyu Sohn
Keyword(s):  
Target Setting ◽  
Automotive Engineering ◽  
Knowledge Based ◽  
Engineering Design Process ◽  
Rule Compliance ◽  
Setting Process ◽  
Marketing Activities ◽  
Cargo Capacity ◽  
Using Data ◽  
High Level

Automotive design relies heavily upon the use of targets. In addition to providing direction and context for the development of new products, the target-setting process forms links between the subjective and objective characteristics of a product and, when executed properly, can help ensure compliance with regulations and feasibility guidelines. At the start of the target-setting process, business and marketing activities define a desired competitive position for a proposed product using data gathered in the various methods of market analysis. From this desired position, business and marketing develop high-level targets for attributes like performance, comfort, and cargo capacity based upon the current and predicated future qualities of products that are perceived to be potential competitors in the marketplace. These business targets guide the formulation of engineering targets. Engineers interpret the business targets to determine what combination of engineering attributes would best accomplish them. These attributes form the basis of a starting set of engineering targets that must be evaluated against databases of corporate, industry, and governmental regulations as well as rules that indicate the design viability and manufacturability of the product. This paper discusses the source, development, and use of targets in automotive engineering as well as formalisms and methods to describe and handle the target-setting and verification processes. In addition, this paper discusses proposed information technology-based and knowledge-based techniques to strengthen and streamline this critical aspect of the engineering design process.

Target Setting in Multi-Divisional Firms: State of the Art and Avenues for Future Research

2018 ◽  
Vol 30 (3) ◽  
pp. 29-54 ◽  
Author(s):  
Christoph Feichter ◽  
Isabella Grabner ◽  
Frank Moers
Keyword(s):  
Practice Research ◽  
Future Research ◽  
Target Setting ◽  
Research Directions ◽  
Performance Targets ◽  
Setting Process ◽  
Survey Results ◽  
Future Research Directions ◽  
Research Questions ◽  
Depth Interviews

ABSTRACT This study provides descriptive evidence on target-setting policies in multi-divisional firms. Despite the importance of performance targets in practice, research mainly focuses on a few key areas in target setting, neglecting many other important aspects of target setting in organizations. Hence, relatively little is known about how performance targets are actually set, especially within multi-divisional firms. We perform in-depth interviews with managers responsible for target setting in multi-divisional firms. Using this interview information, we develop specific research questions that we examine in a survey among large U.S. and European multi-divisional firms. Broadly speaking, the survey results provide evidence that firms commit substantial time and resources to the target-setting process, indicating that they place a high strategic importance on this process. However, we also find that they are not very effective in reaching the goals of the target-setting process. Most importantly, we find a large variation in target-setting policies across firms. We exploit this variation to identify future research directions to guide examination of the diverse decisions managers encounter in the field of target setting.

scholarly journals The role of fisheries data in the development evaluation and impact assessment in support of European fisheries plans

2011 ◽  
Vol 68 (8) ◽  
pp. 1689-1698 ◽  
Author(s):  
E. J. Simmonds ◽  
R. Döring ◽  
P. Daniel ◽  
V. Angot
Keyword(s):  
Impact Assessment ◽  
Fishery Management ◽  
Evaluation Process ◽  
Data Availability ◽  
The European Union ◽  
Past Performance ◽  
Stakeholder Consultation ◽  
Trade Offs ◽  
Development Evaluation

Abstract Simmonds, E. J., Döring, R., Daniel, P., and Angot, V. 2011. The role of fisheries data in the development evaluation and impact assessment in support of European fisheries plans. – ICES Journal of Marine Science, 68: 1689–1698. The European Commission has two formal requirements for developing multi-annual management plan policies: evaluation of the past performance of existing plans and impact assessments (IAs) of the potential benefits of new proposals. The new policies require the evaluation of fishery management in terms of three specific criteria: (i) effectiveness, i.e. the best method to achieve the objectives; (ii) efficiency, the cost-effectiveness, and proportionality; and (iii) consistency, i.e. limiting trade-offs across economic, social, and environmental domains. To develop policy, there is a need to collect relevant information, then to conduct appropriate analyses that provide documentation to support the policy objectives. This paper discusses the data requirements for good environmental, economic, and social understanding of fishery dynamics and management, describing how fishery data are currently linked to the analytical and management evaluation process using examples from 2009 and 2010. The type of information currently used is considered, along with the timetable of data availability, and its effect on historical evaluation and IAs, which are now formally required when any changes to legislation are proposed in the European Union, including following stakeholder consultation. The possibilities and future needs for such data are discussed.

scholarly journals Between knowing and feeling: emotions and the vote in the 2017 Chilean presidential election

2020 ◽  
Vol 26 (3) ◽  
pp. 452-474
Author(s):  
Carolina Segovia ◽  
Ricardo Gamboa
Keyword(s):  
Presidential Election ◽  
Party Identification ◽  
Political Knowledge ◽  
Past Performance ◽  
Explanatory Variables ◽  
The Past ◽  
General Elections ◽  
Using Data ◽  
Relevant Factors

How do citizens decide who to vote for in an election? Traditional answers focus on the role of political knowledge, party identification, and evaluations of the past performance of governments as explanatory variables. In this study we evaluate an alternative argument: the role of emotions. Using data from a survey carried out following the Chilean general elections of December 2017, this article investigates the association of emotions with the vote for Sebastián Piñera, and how emotions interact with other relevant factors that correlate with the vote. We conclude that in Chile, together with party identification and the evaluation of past governments, the emotions aroused by candidates are strongly associated with the voting decision.

Analyst Forecasts and Target Setting in Executive Annual Bonus Contracts*

2020 ◽  
pp. 0000-0000
Author(s):  
Sunhwa Choi ◽  
Sunyoung Kim ◽  
Sewon Kwon ◽  
Jae Yong Shin
Keyword(s):  
Earnings Forecasts ◽  
Positive Association ◽  
Analyst Forecasts ◽  
Past Performance ◽  
Target Setting ◽  
Executive Performance ◽  
Performance Targets ◽  
Sensitivity Tests ◽  
Annual Earnings ◽  
Forward Looking

Whereas practitioners often recommend that firms incorporate forward-looking information in setting executive performance targets, academic studies have mainly focused on past information (e.g., past performance) as information sources. Using analysts' annual earnings forecasts as the main proxy for market-based forward-looking information, we find evidence that boards of S&P 1500 firms exploit forward-looking information in setting targets for executive annual bonus contracts. Furthermore, we find that the positive association between analyst forecasts and firms' bonus target revisions is more pronounced when forecasts are more informative about future firm performance and when they are less likely to be influenced by managers. Our results are robust to a battery of sensitivity tests.

Materiality Judgments and the Resolution of Detected Misstatements: The Role of Managers, Auditors, and Audit Committees

2012 ◽  
Vol 87 (5) ◽  
pp. 1641-1677 ◽  
Author(s):  
Marsha B. Keune ◽  
Karla M. Johnstone
Keyword(s):  
Audit Committee ◽  
Audit Fees ◽  
Managerial Incentives ◽  
Data Availability ◽  
Audit Committees ◽  
Analyst Following ◽  
Financial Expertise ◽  
Using Data

ABSTRACT This study investigates how manager and auditor incentives, along with audit committee characteristics, are associated with materiality judgments about detected misstatements. Using data on detected misstatements that occurred between 2003 and 2006, we find auditors' incentives to protect their reputations weaken the effect of managerial incentives associated with the pressure created by analyst following; auditors are less likely to allow managers to waive material misstatements as audit fees increase. Regarding audit committee characteristics, results reveal that audit committees with greater financial expertise are less likely to allow managers to waive material misstatements compared to audit committees with less expertise. Data Availability: Data used in the study are available from public sources.

INOVASI PEMBELAJARAN AKIDAH AKHLAK MENGGUNAKAN METODE ROLE PLAY DALAM MENINGKATKAN PRESTASI BELAJAR SISWA

2018 ◽  
Vol 2 (1) ◽  
pp. 52-63
Author(s):  
Ansori Ansori
Keyword(s):  
Data Reduction ◽  
Role Play ◽  
Learning Goals ◽  
New Paradigm ◽  
Learning Materials ◽  
Analysis Technique ◽  
Flexible Schedule ◽  
Using Data ◽  
Real Action

The use of various methods will greatly help students in achieving learning goals. As role play method is one way mastery of learning materials through the development of imagination and appreciation of students on learning materials. Data collection techniques in this study are observation, interviews, and documentation. To analyze the data in this research using data analysis technique of Miles and Huberman model that is data reduction (Data Reduction), data presentation (Data Display) and conclusion (Conclution Drawing / verification) The findings in this research is innovation of role play method can change paradigm to the new paradigm so that the role of the teacher is more as a facilitator, counselor, consultant, and comrade study Flexible schedule, open as needed Learning directed by students themselves Problem-based, project, real world, real action, and reflection Design and investigation. Computers as tools, and dynamic media presentations.

The role of corporate investment in social responsible practices in the promotion of employees’ organizational citizenship behaviour

2014 ◽  
Author(s):  
Ana Patrícia Duarte ◽  
José Gonçalves das Neves
Keyword(s):  
Job Satisfaction ◽  
Organizational Citizenship ◽  
Economic Uncertainty ◽  
Socially Responsible ◽  
Organizational Survival ◽  
Current Scenario ◽  
Reducing Costs ◽  
Using Data ◽  
Airline Company

In the current scenario of economic uncertainty, where many organizations struggle harder for reducing costs while improving their competitiveness, employees’ organizational citizenship behaviours might have an enhanced importance for organizational survival and success. A model proposing that corporate engagement in internal socially responsible practices enhances employees’ job satisfaction and consequently increases employees’ extra-role behaviours was tested. Using data obtained from a sample of employees from an airline company (n=133), the model was examined and supported. We have therefore concluded that organizations may foster employees’ extra-role behaviours by investing in corporate socially responsible practices that signal corporate concern with employees and promote job satisfaction.

Peranan Ketua Pengurus dan Manajer Dalam Penyusunan dan Penerapan Laporan Keuangan Berbasis SAK ETAP Pada Koperasi di Kota Palembang

2019 ◽  
Vol 14 (2) ◽  
pp. 119
Author(s):  
Riza Syahputera ◽  
Martha Rianty
Keyword(s):  
Data Analysis ◽  
Sampling Technique ◽  
Financial Statements ◽  
Significant Positive Effect ◽  
Analysis Technique ◽  
Regression Test ◽  
Using Data ◽  
The City ◽  
Positive Effect

AbstractThis study aims to determine the effect of the role of the Chairperson and Cooperative Manager in the preparation and application of Financial Statements based on SAK ETAP in cooperatives in the city of Palembang. This research is a quantitative study using data obtained from questionnaires and measured using a Likert scale. The sampling technique used is purposive sampling. The sample used in this study was the Chairperson of the cooperative and the manager of the cooperative in the city of Palembang. The cooperatives studied were 203 cooperatives. The data analysis technique used is multiple linear regression test. The results showed that the role of cooperative leaders and managers had a significant positive effect on the preparation and application of SAK ETAP-based financial statements.Keywords : chairman, manager, SAK ETAP, cooperative

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