Performance Measure Aggregation, Career Incentives, and Explicit Incentives

2010 ◽  
Vol 22 (1) ◽  
pp. 115-131 ◽  
Author(s):  
Romana L. Autrey ◽  
Shane S. Dikolli ◽  
D. Paul Newman
Keyword(s):  
Firm Performance ◽  
Performance Measures ◽  
Performance Measure ◽  
Career Concerns ◽  
The Cost ◽  
Career Incentives ◽  
Aggregate Measure

ABSTRACT: We examine a setting in which managers have differential career concerns and firm performance is publicly observed using disaggregated measures that are incrementally informative but costly to contract upon. In such a setting, when do firms contract on aggregated rather than disaggregated performance measures? We show that at intermediate levels of managerial career concerns contracting on an aggregate measure can be welfare-enhancing. In this case, the net cost of both contracting directly on an aggregate measure and exploiting career incentives based on disaggregated measures is smaller than the cost of contracting directly on disaggregate measures. Our findings also imply that detailed performance disclosures will be accompanied by lower incentive weights based on aggregate performance when career incentives mitigate distortions caused by aggregation. Further, if performance measures become noisier due to transient shocks, we find that contractual incentive weights on aggregate performance can be either increasing or decreasing, depending on the magnitude of a manager’s career incentives.

Performance-based incentives for agricultural pollution control: identifying and assessing performance measures in the United States

Water Policy ◽  
2011 ◽  
Vol 13 (5) ◽  
pp. 677-692 ◽  
Author(s):  
Jonathan R. Winsten ◽  
Claire Baffaut ◽  
Joseph Britt ◽  
Tatiana Borisova ◽  
Chad Ingels ◽  
...  
Keyword(s):  
Performance Measures ◽  
Best Management Practices ◽  
Water Conservation ◽  
Environmental Performance ◽  
Management Practices ◽  
The United States ◽  
Performance Measure ◽  
Definition Of ◽  
The Cost ◽  
A Performance

Current federal and state soil and water conservation programs consist primarily of cost-sharing or compensating farmers for implementing a set of pre-defined best management practices. This approach does not consider specific environmental outcomes or the cost-effectiveness of the program at the farm or watershed level. Performance-based incentives are payments that are attached to a specified environmental performance measure, for example a reduction in nutrient, sediment, pesticide, or bacteria loss from a field, or reduction in loading at the mouth of a watershed. Assessing environmental performance requires the definition of a performance measure, which is used to calculate resulting incentive payments. In this paper, we discuss issues related to the selection of a performance measure, such as the scale at which the performance is measured, modeling versus monitoring, and the ability of the measure to foster farmer learning and adaptive management. Numerous examples of performance measures adopted or considered by watershed stakeholders in several states are presented. Watershed managers, policy makers, and extension agents can consider this information to make informed choices among proposed approaches toward improving water quality in streams affected by agricultural nonpoint source pollution.

Is more really better? Performance measure variety and environmental uncertainty

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pall Rikhardsson ◽  
Stefan Wendt ◽  
Auður Arna Arnardóttir ◽  
Throstur Olaf Sigurjónsson
Keyword(s):  
Firm Performance ◽  
Performance Measurement ◽  
Performance Measures ◽  
Measurement System ◽  
Environmental Uncertainty ◽  
Performance Measure ◽  
Performance Measurement System ◽  
Service Firms ◽  
Content Type ◽  
Improve Measurement

PurposeThis paper asks the question of whether more environmental uncertainty affects the design of performance measurement systems in terms of a greater variety of performance measures and whether this leads to more management satisfaction with the performance measurement system and improved firm performance.Design/methodology/approachInformation processing theory is used to frame the hypotheses and findings. A questionnaire was sent to the 300 largest companies in Iceland, where environmental uncertainty has been prevalent.FindingsThe results indicate that increased uncertainty leads to a larger variety of non-financial performance measures, such as customer measures. A positive relationship is found between management satisfaction with the performance measurement system and firm performance. However, the variety of performance measures was not linked to management satisfaction or firm performance.Research limitations/implicationsThe results suggest that managers increase the variety of performance measures when uncertainty increases. However, it is not the variety itself that increases management satisfaction or improves firm performance.Practical implicationsPerformance measurement design is affected by environmental uncertainty. Managers focus on important stakeholder groups such as customers under such conditions and can consult research and practice for the purpose of customer relationship management and customer profitability measurement to improve measurement selection.Originality/valueThis work focusses on performance measurement system design, examining the use of more than 50 different performance measures, and differentiates between small and medium-sized firms and between service and non-service firms.

Corporate governance and alternative performance measures: evidence from Australian firms

2011 ◽  
Vol 36 (3) ◽  
pp. 371-386 ◽  
Author(s):  
Peter Kien Pham ◽  
Jo-Ann Suchard ◽  
Jason Zein
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Performance Measures ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
International Standards ◽  
International Evidence ◽  
Long Time ◽  
The Relationship

We examine the extent to which individual monitoring mechanisms enhance firm performance and shareholder value. We use a sample of Australian firms, from 1994 to 2003, to analyse the relationship between firm performance and corporate governance. This provides a long time series of governance data by international standards and allows us to study governance–performance dynamics over an extensive period. We use Stern Stewart & Co’s economic value added (EVA) as an alternative performance measure and provide a comparison to Tobin’s Q. However, similar to the international evidence, we do not find a significant relationship between either of the performance measures and corporate governance. Using various econometric techniques we show that our results are also robust to endogeneity biases that can arise in the governance–performance relation.

Effects of Accounting-Method Choices on Subjective Performance-Measure Weighting Decisions: Experimental Evidence on Precision and Error Covariance

2005 ◽  
Vol 80 (4) ◽  
pp. 1163-1192 ◽  
Author(s):  
Ranjani Krishnan ◽  
Joan L. Luft ◽  
Michael D. Shields
Keyword(s):  
Performance Measures ◽  
Error Variance ◽  
Spillover Effects ◽  
Performance Measure ◽  
Incentive System ◽  
Experimental Setting ◽  
Error Covariance ◽  
Psychology Theory ◽  
Optimal Weighting ◽  
Similarity And Difference

Performance-measure weights for incentive compensation are often determined subjectively. Determining these weights is a cognitively difficult task, and archival research shows that observed performance-measure weights are only partially consistent with the predictions of agency theory. Ittner et al. (2003) have concluded that psychology theory can help to explain such inconsistencies. In an experimental setting based on Feltham and Xie (1994), we use psychology theories of reasoning to predict distinctive patterns of similarity and difference between optimal and actual subjective performance-measure weights. The following predictions are supported. First, in contrast to a number of prior studies, most individuals' decisions are significantly influenced by the performance measures' error variance (precision) and error covariance. Second, directional errors in the use of these measurement attributes are relatively frequent, resulting in a mean underreaction to an accounting change that alters performance measurement error. Third, individuals seem insufficiently aware that a change in the accounting for one measure has spillover effects on the optimal weighting of the other measure in a two-measure incentive system. In consequence, they make performance-measure weighting decisions that are likely to result in misallocations of agent effort.

THE FOREIGN BANK EFFECT ON VALUE CREATION IN COMMERCIAL BANKS INCORPORATED IN THAILAND

2008 ◽  
Vol 53 (02) ◽  
pp. 215-244
Author(s):  
CHANTAL HERBERHOLZ
Keyword(s):  
Performance Measures ◽  
Commercial Banks ◽  
Economic Value ◽  
Value Added ◽  
Foreign Bank ◽  
Level Data ◽  
Beneficial Impact ◽  
Domestic Banks ◽  
The Cost ◽  
Traditional Performance

Using quarterly bank-level data over the period 1997–2005, this paper examines the effect of foreign bank presence on commercial banks incorporated in Thailand, using traditional and value-based performance measures as indicators of the degree of competition and proxies for the efficiency in the provision of banking services. The findings suggest that foreign bank presence is not only beneficial in terms of traditional performance measures, but also in terms of economic profit. The results with respect to economic value added and cash value added, however, cast some doubt over the presumed benefits of opening up, underlining the importance of using a proxy that considers the cost of equity and departs from standard accounting principles. Furthermore, the results indicate that foreign entry through the acquisition of domestic banks appears to have a stronger and more beneficial impact on locally incorporated banks than through the establishment of branches, with majority ownership by a foreign blockholder being of importance.

Abstract 3429: Implementation of Electronic Medical Record Stroke Templates Increases Compliance with Stroke Performance Measures

Stroke ◽  
2012 ◽  
Vol 43 (suppl_1) ◽  
Author(s):  
Crismely A Perdomo ◽  
Vepuka E Kauari ◽  
Elizabeth Suarez ◽  
Olajide Williams ◽  
Joshua Stillman ◽  
...  
Keyword(s):  
Medical Record ◽  
Electronic Medical Record ◽  
Performance Measures ◽  
New York State ◽  
Stroke Care ◽  
Performance Measure ◽  
Performance Comparison ◽  
York State Department ◽  
Free Text ◽  
And Performance

Background and Purpose The literature demonstrates how utilizing evidence-based, standardized stroke care can improve patient outcomes; however, the contribution of electronic medical record (EMR) systems may also impact outcomes by ensuring utilization and compliance with established stroke performance measures, facilitating and improving documentation requirements, and standardizing approach to care. In 2008, documentation in patients’ medical records was done in combination of paper and a template free EMR. Originally, the EMR was used for order entry, then transitioned to full electronic documentation in 2009. At that time we implemented our stroke templates and performance measures based on regulatory standards. We hypothesized that the stroke template implementation would help us achieve performance measure criteria above state benchmarks as set out by the New York State Department of Health (NYS DOH). Methods Implementation was phased in [over 18 months], initially using a template that only included neurological assessment and free text fields for stroke measures. By July 2010, existing templates were modified and additional stroke templates were implemented to meet new regulatory requirements and meaningful use criteria. Retrospective data review was conducted for performance comparison between 2008 -- one year prior to EMR/template implementation -- and 2010. In Quarter 1 of 2011 EMR was also implemented in the Emergency Department (ED). Data was reviewed for compliance with stroke measures. Results Documentation compliance substantially improved between 2008 and Quarter 1 2011: Compliance for these measures has been maintained ≥ 85% since November 2010, ≥ 90% Q1 2011 Conclusions The EMR implementation of stroke templates and performance measures can produce substantial improvement in performance measure compliance. Future steps will include automated documentation alerts to retrieve information and real time discovery of missing documentation for concurrent quality review and improvement

scholarly journals The Influence of Founder Status on Firm Performance: Empirical Evidence from Canadian IPO Firms

2016 ◽  
Vol 8 (11) ◽  
pp. 134 ◽  
Author(s):  
Saif Ullah ◽  
Dan Zhang
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Firm Survival ◽  
Negative Influence ◽  
Performance Measure ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Survival Status ◽  
Income Stream

<p>This study compares performance for founder-managed firms and professional-managed firms by analyzing 138 Canadian IPO firms that went public from 2004 to 2013. In this paper, we measure firm performance in two ways: Tobin’s Q and ROA are used to measure a firm’s financial performance, while firm survival status is used as a supplementary performance measure. We find that founder-managed firms underperform and underlive their counterparts when firm performance is measured by Tobin’s Q and survival status. Founder status is proved to be unrelated to ROA. The negative influence of founder status can be explained by the relevant transaction hypothesis, which states that founder-managers may act for the controlling family and are more concerned with the associated private income stream than with maximizing the value of the firm.</p>

A Tutorial on the Use of ROC Analysis for Computer-Aided Diagnostic Systems

2005 ◽  
Vol 27 (3) ◽  
pp. 181-198 ◽  
Author(s):  
Ulrich Scheipers ◽  
Christian Perrey ◽  
Stefan Siebers ◽  
Christian Hansen ◽  
Helmut Ermert
Keyword(s):  
Performance Measures ◽  
Roc Curve ◽  
Roc Analysis ◽  
Real Life ◽  
Performance Measure ◽  
Diagnostic Systems ◽  
Life Data ◽  
Separation Threshold ◽  
Real Life Data ◽  
Computer Aided

The application of the receiver operating characteristic (ROC) curve for computer-aided diagnostic systems is reviewed. A statistical framework is presented and different methods of evaluating the classification performance of computer-aided diagnostic systems, and, in particular, systems for ultrasonic tissue characterization, are derived. Most classifiers that are used today are dependent on a separation threshold, which can be chosen freely in many cases. The separation threshold separates the range of output values of the classification system into different target groups, thus conducting the actual classification process. In the first part of this paper, threshold specific performance measures, e.g., sensitivity and specificity; are presented. In the second part, a threshold-independent performance measure, the area under the ROC curve, is reviewed. Only the use of separation threshold-independent performance measures provides classification results that are overall representative for computer-aided diagnostic systems. The following text was motivated by the lack of a complete and definite discussion of the underlying subject in available textbooks, references and publications. Most manuscripts published so far address the theme of performance evaluation using ROC analysis in a manner too general to be practical for everyday use in the development of computer-aided diagnostic systems. Nowadays, the user of computer-aided diagnostic systems typically handles huge amounts of numerical data, not always distributed normally. Many assumptions made in more or less theoretical works on ROC analysis are no longer valid for real-life data. The paper aims at closing the gap between theoretical works and real-life data. The review provides the interested scientist with information needed to conduct ROC analysis and to integrate algorithms performing ROC analysis into classification systems while understanding the basic principles of classification.

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