Assessing the performance of business unit managers

Jan Bouwens and Laurence van Lent

No 92, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: Using a sample of 140 managers, we investigate the use of various performance metrics in determining the periodic assessment, bonus decisions, and career paths of business unit managers. We show that the weight on accounting return measures is associated with the authority of these managers, and we document that both disaggregated measures (expenses and revenues), and non-financial measures play a greater role as interdependencies between business units increase. The results suggest separate and distinct roles for different types of performance measures. Accounting return measures are used to create the proper incentives for managers with greater authority, while disaggregated and non-financial measures are employed in response to interdependencies.

JEL-codes: M41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-bec and nep-fmk
Date: 2006
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Journal Article: Assessing the Performance of Business Unit Managers (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:dgr:kubcen:200692

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