Accounting and Finance

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Browsing Accounting and Finance by Author "Webb, Alan"

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    Improving Perceptions of Fairness and Performance through Explanation and Perspective Taking
    (University of Waterloo, 2019-08-02) Wong, Christopher; Webb, Alan
    Employee performance can be negatively impacted due to the occurrence of unforeseen negative events. To filter out the influence of these negative exogenous shocks on employee compensation, management can commit ex-ante to consider performing ex-post adjustments to objectively determined compensation. However, due to compensation interdependence between subordinates common to these types of incentive schemes, management may be reluctant to perform such ex-post adjustments. Employees not receiving ex-post adjustments may feel unfairly treated, suggesting the need to examine how management’s selective exercise of ex-post adjustments impact employee fairness perceptions and subsequent performance. Employees’ reaction to management’s apparent non-helping behaviour may stem in part from a lack of sensitivity to the difficulty management faces in making such adjustments. I therefore examine two interventions, perspective taking and explanation, aimed at improving employee fairness perceptions and performance. To test my predictions, I conduct an experiment with undergraduate business student participants. I find that the announcement of an ex post adjustment policy does not significantly impact participant perceptions of fairness but significantly improves performance when they encounter their first negative shock. In addition, I find that although both explanation and perspective taking significantly improve perceptions of fairness, only perspective taking improves performance after not receiving an ex-post adjustment. The current study contributes to the growing management accounting literature examining how management subjectivity in compensation contracts influence subordinate performance. This study further contributes to organizational justice literature by examining the link between fairness perceptions and task performance. Finally, my results show that perspective taking can be an effective intervention to improve employee perceptions of fairness and performance in response to receiving unfavourable outcomes, which is relevant to practitioners in designing compensation contracts for employees.
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    Incomplete Incentives, Task Temporality, and Effort Spillover in a Multitask Environment
    (University of Waterloo, 2022-01-07) Lane, Dorian; Presslee, Adam; Webb, Alan
    Incomplete incentive contracts in multitask environments present a significant control challenge of ensuring that employees expend sufficient effort towards all assigned tasks, particularly those that are not directly incentivized. Prior research finds that the severity of this agency issue depends on task temporality such that it is less problematic when the tasks are performed concurrently as opposed to sequentially. I extend the literature by examining how incentive type, task temporality, and performance feedback influence effort spillover onto a second, unincentivized task. Specifically, I predict that goal-based incentives and positive performance feedback on an incentivized task will lead to a stronger positive affective response, which will induce greater effort spillover onto an unincentivized task, under sequential multitasking relative to concurrent multitasking. To test my predictions, I employ a 2 x 2 between-subjects experimental design, where I manipulate the type of incentive contract used for the incentivized task between goal-based or piece-rate incentives and task temporality between concurrent or sequential. Participants complete two real-effort tasks where Task 1 performance is incentivized, and Task 2 performance is unincentivized. I examine the impact of my manipulations on participants’ affective responses to performance feedback on the incentivized task and their performance on the unincentivized task, which proxies for task effort, as my dependent variables of interest. I find that goal-based incentives under sequential multitasking following goal attainment does lead to greater effort spillover onto an unincentivized task under sequential multitasking compared to concurrent multitasking. Consistent with my theory, I find that positive affect from performance feedback is positively associated with effort spillover onto an unincentivized task. I further predict that goal-based incentives and negative performance feedback on an incentivized task is associated with a stronger negative affective response, which will induce lower effort spillover onto an unincentivized task under sequential multitasking relative to concurrent multitasking. However, I do not find support for the prediction. Specifically, I do not find evidence that negative affect following negative performance feedback is associated with negative effort spillover onto an unincentivized task. The findings from this study highlight the importance of examining how features of the management control system (i.e., incentive type, performance feedback, and job design) can help to address a costly agency problem in multitask environments.
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    Working Smarter and Working Harder: Combining Learning and Performance Goals to Improve Performance in a High-Complexity Task Environment
    (University of Waterloo, 2018-12-20) Richins, Greg; Webb, Alan
    In a high-complexity task environment individual productivity can be improved through exerting more effort (i.e., working harder) as well as by learning improved task strategies. I examine the productivity effects of both learning goals and performance goals in such an environment. I argue that in a high-complexity task environment learning can often be an important predictor of task performance. As such, focusing on learning may be at least as important as working harder. Using an experiment with graduate and undergraduate accounting student participants, I predict and find that learning goals alone lead to increased learning relative to performance goals alone and that directing effort away from conventional performance toward learning does not impair task performance. I further predict that productivity can be enhanced by combining learning and performance goals. I predict that when assigning both goal types simultaneously, the presence of a performance goal will impair learning. However, I find that combining the two goal types simultaneously does not harm learning and improves performance. I further predict and find that assigning both goal types sequentially such that performance goals are assigned only after learning goals have induced learning leads to better performance than using learning goals in isolation. My results provide an understanding of the relationships among goal type, learning, and performance. This understanding contributes to the extant academic literature on goal setting and will be relevant to managers when designing and implementing management control systems.