Knowing that you know: incentive effects of relative performance disclosure

Pablo Casas-Arce (), Carolyn Deller (), F. Asís Martínez-Jerez () and José Manuel Narciso ()
Additional contact information
Pablo Casas-Arce: Arizona State University
Carolyn Deller: University of Pennsylvania
F. Asís Martínez-Jerez: Cornell University
José Manuel Narciso: Bionline

Review of Accounting Studies, 2023, vol. 28, issue 1, No 3, 125 pages

Abstract: Abstract This paper studies differential employee responses to the public disclosure of individual performance information throughout an organization. We argue that, to the extent that employees care about their colleagues’ perceptions of their productivity, public disclosure will increase motivation. Moreover, the effect should be stronger for employees whose colleagues expect them to have higher performance. We obtained data from a bank that transitioned from private to public disclosure of employee rankings and, consistent with our hypothesis, find heterogeneity in employee responses to public disclosure. Employees with a history of poor performance increase their output more than past good performers when rankings become public. Additionally, more highly educated employees react more strongly to the change. However, contrary to the literature that finds gender differences in competitive environments, we do not find systematic differences in the response to public disclosure on this dimension. Overall, the results suggest that public disclosure is an important dimension to consider when designing a compensation system.

Keywords: Tournaments; Relative performance information; Public disclosure; M41; M52 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11142-021-09636-2

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