Management Accounting Section Midyear Meeting

The Effect of the Detail Level of Rankings Under Individual and Group Incentive Contracts: The Moderating Effect of Gender

• In Event: Relative Performance Information

Abstract

The effectiveness of rankings has been related to the level of informativeness provided within and to the design of incentive systems. This study investigates via an experiment the interaction effect between the detail level of rankings (ordinal information -less informative- vs cardinal information -more informative-) and the type of incentive contract (individual-performance vs. group-performance) on agents’ behavior in a multi-period context. Considering that, there is a gender gap when analyzing the effect of management control tools, and that men and women react differently to comparison and competition contexts, this paper also hypothesizes that the strength of the interaction effect differs across gender. Our results suggest that there is an interaction effect between rankings and incentives, only in the case of men. Providing detail level of ranking (i.e., cardinal in comparison to ordinal performance information) does not affect men’s performance under individual-performance incentives. In contrast, the detail level of rankings worsens men’s performance under group-performance incentives. No interaction effect was found for women, either under individual-performance incentives, or group-performance incentives.

Authors

• Maria J. Sanchez-Exposito, Pablo de Olavide University

• Laura Gomez-Ruiz, Pablo de Olavide University