Management Accounting Section Midyear Meeting

Performance Measures in Senior Executive Incentive Contracts for Platform Businesses

• In Event: Break and Research Exhibition 1
  In Paper Session: Room 1

Abstract

Since the advent of the internet, platforms have demonstrated their immense power to revolutionize industries, including travel, transportation, media, food delivery, mobile and desktop operating systems, and e-commerce. While start-ups and incumbent players aim to leverage platform business models to their advantage, most of these endeavors fail in their implementation. Since performance management plays a key role in successfully implementing strategies, I examine whether a platform strategy is a contingent factor for performance management. Anecdotal evidence suggests that traditional performance measures are incongruent with the demands placed on a platform business. I analyze cross-sectional data on performance measures in senior executive incentive contracts collected by coding proxy statements of companies mostly in the S&P500. I find that platforms use fewer performance measures and rely less on bottom-line-oriented performance measures in their annual incentive contracts for senior executives. I do not find support for my hypothesis that platforms rely more on top-line oriented and non-financial performance measures.

Author

• Leonard Strauss, WU - Vienna University of Economics and Business