How Do Group Size and Group Relative Performance Information Affect Managerial Reporting?

• In Event: Relative Performance Information

Abstract

We conduct a laboratory experiment to examine how two important organizational design choices – the size of the group and the provision of group-level relative performance information (RPI) – affect managers’ reporting honesty. Consistent with our theory and predictions, we find that managers report less honestly in large groups than in small groups. We also find that managers’ honesty decreases over time in both small and large groups and that group-level RPI mitigates this decrease for small groups but actually exacerbates this decrease for large groups. Collectively, our study has implications for an organization’s architecture and how performance is measured, as well as for the efficacy of providing group-level relative performance information.

Authors

• Lori Shefchik Bhaskar, Indiana University - Bloomington

• Timothy Mallon, Indiana University

• Geoff B Sprinkle, Indiana University - Bloomington

• Dan Way, Clemson University