Supervisor Discretion in Target Setting: An Empirical Investigation

• 成果类型: Article
• 署名作者: Bol, Jasmijn C.; Keune, Timothy M.; Matsumura, Ella Mae; Shin, Jae Yong
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University of South Carolina System; University of South Carolina Columbia; University of Wisconsin System; University of Wisconsin Madison; Seoul National University (SNU)
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2010.85.6.1861
• 发表日期: 2010
• 页码: 1861-1886
• 关键词: ORGANIZATIONAL COMPLEXITY; information asymmetry; performance standards; JUSTICE; IMPACT; POWER; PARTICIPATION; plan

摘要

In a setting in which corporate headquarters dictates total sales targets, we study how supervisors allocate sales targets to individual stores. Specifically, we analyze whether supervisors strategically use discretion in the target-setting process to address compensation contracting issues. We first examine whether supervisors use discretion to manage compensation risk. The results are consistent with the agency-theoretic prediction that supervisors provide easier targets to stores facing higher levels of store-specific risk. Next, we examine whether discretion is used to mitigate fairness concerns. The results suggest that, consistent with behavioral arguments, supervisors use discretion to deal with fairness issues, even if the area of the supervisor's discretion is not the source of the fairness concerns. Finally, we analyze whether supervisors use discretion in the target-setting process to reduce their potential confrontation costs. Consistent with research in psychology, we find that supervisors provide easier targets to store managers with relatively higher hierarchical status.