The Effect of Competition Intensity and Competition Type on the Use of Customer Satisfaction Measures in Executive Annual Bonus Contracts

2014 ◽  
Vol 90 (1) ◽  
pp. 229-263 ◽  
Author(s):  
Clara Xiaoling Chen ◽  
Ella Mae Matsumura ◽  
Jae Yong Shin ◽  
Steve Yu-Ching Wu
Keyword(s):  
Customer Satisfaction ◽  
Interactive Effect ◽  
Joint Effect ◽  
Performance Measure ◽  
Two Dimensions ◽  
Data Availability ◽  
Competition Intensity ◽  
Nonfinancial Performance ◽  
Alternative Measures ◽  
Satisfaction Measures

ABSTRACT This paper empirically examines the interactive effect of competition intensity and competition type on the use of customer satisfaction measures in executives' annual bonus contracts. Specifically, we predict a stronger association between competition intensity in an industry and the use of customer satisfaction measures in executives' annual bonus contracts when the competition is non-price-based than when the competition is price-based. Using hand-collected data from Standard & Poor's (S&P) 1500 firms' disclosures of the use of customer satisfaction measures in executive bonus contracts in 2006 and 2010 proxy statements, we find results consistent with our prediction. Our results are robust to alternative measures of competition type and competition intensity. We also find similar results when we use the weight on customer satisfaction measures in executive bonus contracts as the dependent variable. Our study extends the literature on the effect of competition on the design of managerial incentives by distinguishing between competition intensity and competition type, and providing the first large-sample empirical evidence on the joint effect of these two dimensions of competition on the incentive use of an important nonfinancial performance measure. Data Availability: Data used in this study are obtained from publicly available sources.

Gaming Nonfinancial Performance Measures

2002 ◽  
Vol 14 (1) ◽  
pp. 119-133 ◽  
Author(s):  
Michael J. Smith
Keyword(s):  
Customer Satisfaction ◽  
Performance Measures ◽  
Performance Measure ◽  
Optimal Contract ◽  
Dual Nature ◽  
Agency Model ◽  
Current Period ◽  
Incremental Value ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures

This multitask agency model examines the use of nonfinancial performance measures. The first effort affects only current-period profit. The second effort affects only customer satisfaction, which increases future profits. The third effort (shifting effort) simultaneously affects both performance measures, increasing one and decreasing the other. In some cases, shifting increases the principal's expected surplus. In others, the agent uses it to “arbitrage” the contract by shifting units into the more heavily weighted performance measure. Shifting's dual nature implies that it can either increase or decrease the incremental value of customer satisfaction as a performance measure. The optimal contract may entail a negative weight on customer satisfaction.

How Patterns of Past Guidance Provision Affect Investor Judgments: The Joint Effect of Guidance Frequency and Guidance Pattern Consistency

2017 ◽  
Vol 93 (3) ◽  
pp. 327-348 ◽  
Author(s):  
Michael Tang ◽  
Shankar Venkataraman
Keyword(s):  
Empirical Research ◽  
Voluntary Disclosure ◽  
Joint Effect ◽  
Two Dimensions ◽  
Data Availability ◽  
Earnings Guidance ◽  
Managerial Opportunism ◽  
Investor Judgments ◽  
Historical Pattern ◽  
Shed Light

ABSTRACT Theory suggests that the provision of voluntary disclosure, in itself, is informative to investors, but prior empirical research largely focuses on investors' reaction to the content of disclosure. We extend the literature on earnings guidance by experimentally examining how investors react to a firm's historical pattern of guidance provision, holding constant guidance content. We manipulate two dimensions of guidance provision—how often guidance is provided (frequency), and whether guidance is provided for the same quarter(s) across consecutive years (pattern consistency). We find that consistency positively impacts investors' confidence and likelihood of investing because investors associate consistency with lesser managerial opportunism, but consistency matters only when frequency is low. Our results shed light on an important dimension of guidance provision unexamined in prior research—guidance consistency—and highlight when it can influence investor judgments even when key elements of a firm's historical guidance content are held constant. Data Availability: Contact the authors.

Joint Impact of Materiality Guidance and Justification Requirement on Auditors' Planning Materiality

2015 ◽  
Vol 28 (2) ◽  
pp. 17-27 ◽  
Author(s):  
Juthathip Audsabumrungrat ◽  
Sompong Pornupatham ◽  
Hun-Tong Tan
Keyword(s):  
Current Literature ◽  
Detrimental Effect ◽  
Joint Effect ◽  
Data Availability

ABSTRACT In this study, we examine a setting in which overreliance on structured materiality guidance leads to less appropriate materiality assessments by auditors, and investigate whether a justification requirement in the absence of accountability mitigates this effect. Results from our experiment show that audit managers make less conservative and less appropriate planning materiality assessments in the presence of structured materiality guidance, but that this detrimental effect is mitigated by the need to justify their judgments. Our study on the joint effect of these two features extends current literature on materiality judgments and has implications for audit practice. Data Availability: Contact the authors.

Does Wrongdoer Reputation Matter? Impact of Auditor-Wrongdoer Performance and Likeability Reputations on Fellow Auditors' Intention to Take Action and Choice of Reporting Outlet

2011 ◽  
Vol 23 (2) ◽  
pp. 207-234 ◽  
Author(s):  
Jesse C. Robertson ◽  
Chad M. Stefaniak ◽  
Mary B. Curtis
Keyword(s):  
Two Dimensions ◽  
Data Availability ◽  
Good Performer ◽  
Reporting Decisions ◽  
Prior Literature ◽  
Reporting Channel ◽  
Channel Preferences ◽  
Main Effects ◽  
The Impact ◽  
Selection Of

ABSTRACT We investigate the effects of auditor-wrongdoer reputations for performance and likeability on fellow auditors' intentions to take action in response to a questionable audit act. We also use this context to explore auditor selection of reporting outlets, when they do choose to take action. In an experiment with 181 auditors, main effects suggest that likeability reputation is a significant determinant of intention to take action, while performance reputation is marginally significant. As expected, interaction results indicate that auditors have the greatest intention to take action against less likeable, poor performers. Contrary to expectations, intention to take action against a more likeable, good performer is no lower than the mixed conditions. Thus, the influence of the two dimensions of reputation is complex. Additionally, we find auditors are more likely to whistle-blow internally than externally, and through non-anonymous outlets than anonymous outlets. Our contributions include exploring the impact of reputation on the actions of third parties, and advancing prior literature by considering the influence of wrongdoer attributes on reporting decisions and auditors' reporting channel preferences. Data Availability: Data are available from the first author upon request.

scholarly journals Evaluating the Impact and Value of Competitive Intelligence From The users Perspective - The Case of the National Research Council’s Technical Intelligence Unit

2015 ◽  
Vol 4 (3) ◽  
Author(s):  
Jonathan Calof
Keyword(s):  
Customer Satisfaction ◽  
Literature Review ◽  
Service Quality ◽  
Current Literature ◽  
Client Satisfaction ◽  
Competitive Intelligence ◽  
Evaluation Instrument ◽  
Technical Intelligence ◽  
Satisfaction Measures ◽  
The Impact

Understanding and being able to measure and prove the impact and value of intelligence is of significant importance. The objective of this study was to develop an evaluation instrument that the users of intelligence could fill in that could be used to assess both the impact and value of the intelligence they received. Starting with an evaluation instrument based on lists of benefits identified in the competitive intelligence literature, measures of these benefits and client satisfaction/service quality metrics, the study researchers interviewed clients of one large government competitive technical intelligence organization asking them to articulate the benefits they obtained from the intelligence they received and methods for evaluating these benefits. All users of intelligence identified benefits they had received from the intelligence received. Additional benefits beyond those that are in the current literature were identified by those interviewed. In terms of measurement of these benefits, intelligence users (the clients) understood why hard financial type measures for example ROI or dollar impact on performance was important (especially in their organization) they felt that assessing these for the intelligence they received would be difficult but that softer, more subjective measurement such as extent to which the user agrees that the intelligence provided the intended benefit could be used. Additional perceptual based indicators of service quality and customer satisfaction measures were also suggested by intelligence clients. Based onthe results of the literature review and interviews, an intelligence evaluation instrument was developed that asks the clients to assess the extent to which they have realized one or more of 27 impacts identified in this study as well as assessing 10 elements of service quality.

scholarly journals Effects of Corporate Social Responsibility on Firm Performance: Does Customer Satisfaction Matter?

2020 ◽  
Vol 12 (18) ◽  
pp. 7545 ◽  
Author(s):  
An-Pin Wei ◽  
Chi-Lu Peng ◽  
Hao-Chen Huang ◽  
Shang-Pao Yeh
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Customer Satisfaction ◽  
Social Responsibility ◽  
Financial Performance ◽  
Interactive Effect ◽  
The United States ◽  
Negative Effect ◽  
Corporate Social Irresponsibility ◽  
Corporate Social

Academic research has shed light on the empirical relationships among a firm’s corporate social responsibility (CSR), corporate social irresponsibility (CSiR) and firm performance and on the firm’s customer satisfaction–firm performance relationship in different markets. However, little notice has been taken of whether the coexistence of corporate social responsibility, corporate social irresponsibility and customer satisfaction has an interactive effect on firm performance. This study aims to examine the effects of their interaction on firm performance from an investment perspective. Using unbalanced panel regression to test a sample of publicly traded firms from the United States, this study finds that, in general, firms with higher customer satisfaction earn positive changes in abnormal stock returns. For firms that engage in CSR, CSR positively affects corporate performance, whereas firms’ social irresponsibility activities reduce firms’ financial performance. All else equal, a positive interactive effect of CSiR and customer satisfaction on stock return was observed. The results reveal that high customer satisfaction can alleviate the negative effect of corporate social irresponsibility on firms’ financial performance. Our findings will help management executives and investors to understand that the negative effect of a firm’s unforeseen events on firm performance can be weakened by increasing customer satisfaction.

scholarly journals The Service Quality Dimensions that Affect Customer Satisfaction in the Jordanian Banking Sector

2019 ◽  
Vol 11 (4) ◽  
pp. 1113 ◽  
Author(s):  
Miklós Pakurár ◽  
Hossam Haddad ◽  
János Nagy ◽  
József Popp ◽  
Judit Oláh
Keyword(s):  
Customer Satisfaction ◽  
Service Quality ◽  
Banking Sector ◽  
Two Dimensions ◽  
Initial Model ◽  
Four Dimensions ◽  
Sample Data ◽  
Quality Dimensions ◽  
Service Quality Dimensions ◽  
Financial Aspect

Banks must meet the needs of their customers in order to achieve sustainable development. The aim of this paper is to examine service quality dimensions, by using the modified SERVQUAL model, which can be used to measure customer satisfaction, and the effect of these dimensions (tangibles, responsiveness, empathy, assurance, reliability, access, financial aspect, and employee competences) on customer satisfaction in Jordanian banks. Data were gathered from 825 customers in the Jordanian banking sector. The sample data were statistically analyzed through exploratory factor analysis by the SPSS program to determine service quality perception and customer satisfaction. The results illustrate that the modified SERVQUAL Model extracted four subscales in the new model instead of eight in the initial model. The first subscale contains four dimensions—assurance, reliability, access and employee competences. The second subscale consists of two dimensions—responsiveness and empathy. The third and fourth subscales—financial aspect and tangibility—are separate factors. Further studies should consider the dimensions of access, financial aspect, and employee competences as essential parts of service quality dimensions with the other subscales, so as to improve wider customer satisfaction in the banking sector. In the authors’ opinion, the modified SERVQUAL model is useful for addressing customer satisfaction in the banking sector.

Joint effect of service recovery types and times on customer satisfaction in lodging

2019 ◽  
Vol 38 ◽  
pp. 149-158 ◽  
Author(s):  
Dan Jin ◽  
Annmarie Nicely ◽  
Alei Fan ◽  
Howard Adler
Keyword(s):  
Customer Satisfaction ◽  
Service Recovery ◽  
Joint Effect
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