AAA Spark Meeting of Regions

The Effect of Superiors’ Value Congruence and Compensation Scheme on Target Setting in Social Mission Organizations

• In Event: ABC and Corporate Governance: Compensation

Abstract

This study experimentally examines the effect of superiors’ value-congruence with the social mission of an organization and compensation scheme on target setting. We predict and find superiors set higher targets for their subordinates if superiors personally value the social mission of the organization (i.e., value-congruent superiors) when paid with a fixed wage compared to non-value congruent superiors. We also predict and find that this effect of value congruence is lessened when superiors are compensated with performance-based pay. Lastly, we find that our main findings are driven by superiors higher in benevolence, while superiors lower in benevolence respond in an opposite manner. Our findings provide insights for accounting research and for social mission organizations in designing compensation schemes for superiors.

Authors

• Wioleta Celina Olczak, Marquette University

• Tyler F Thomas, University of Wisconsin-Madison

• Dimitri Yatsenko, University of Wisconsin-Whitewater