Relative performance evaluation among business unit level managers

Hilco J. van Elten

Accounting Research Journal, 2017, vol. 30, issue 2, 185-204

Abstract: Purpose - Relative performance evaluation (RPE) is a widely studied topic in the theoretical and analytical accounting and economics literatures. The empirical literature also addresses this topic, with its main focus on executive compensation. This paper aims to extend the findings of the literature by assessing the extent to which RPE is used at lower organisational levels. Design/methodology/approach - This study uses a purpose-developed survey to gather data from 325 business unit managers. Findings - This study finds that RPE is used to a great extent in the performance evaluation of business unit managers. Additionally, the findings suggest that RPE use increases the informativeness of the performance evaluation through noise reduction. Noise in the performance evaluation is described in literature as the primary antecedent of RPE, but prior research provides only weak empirical support for this claim. Research limitations/implications - This study hypothesises a causal relation between RPE and noise in performance evaluation. However, the use of cross-sectional survey data only allows testing associations, not causations. Originality/value - The originality and value of the paper lie in the focus on the business unit level and the use of survey data, which are almost completely absent in this area of research that almost exclusively uses archival data at the executive level.

Keywords: Management control; Survey; Benchmarking; Performance evaluation; Relative performance evaluation; Business unit managers (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-06-2015-0091

DOI: 10.1108/ARJ-06-2015-0091

Access Statistics for this article

Accounting Research Journal is currently edited by Professor Reza Monem

More articles in Accounting Research Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().