 Effects of Target Timing and Contract Frame on Individual PerformanceXiaotao (Kelvin) Liu and Yue (May) Zhang European Accounting Review, 2015, vol. 24, issue 2, 329-345 Abstract: This study experimentally examines the effects of target timing and contract frame on individual performance. We study four target-based incentive contracts, categorised by when participants learn the performance target ( ex ante , or before production starts, vs. ex post , or after production ends) and how the incentive contract is framed (bonus vs. penalty). The performance target in this study is determined by a peer group's average productivity. We find that performance is significantly higher for bonus-framed contracts when the performance target is revealed ex post , as opposed to ex ante . In contrast, revealing the peer-based performance target ex ante or ex post has no impact on performance for penalty-framed contracts. We also find that the ex post , bonus-framed contract significantly outperforms the other three contracts. This finding supports practitioners' claim that employers should reward (as opposed to punish) individuals based on their performance, relative to that of their peers, ex post . Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:euract:v:24:y:2015:i:2:p:329-345 Ordering information: This journal article can be ordered from DOI: 10.1080/09638180.2014.942337 Access Statistics for this article European Accounting Review is currently edited by Laurence van Lent More articles in European Accounting Review from Taylor & Francis Journals |
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