Vertical Pay Dispersion,Peer Observability,and Misreporting in a Participative Budgeting Setting

In this study, we examine the joint effect of vertical pay dispersion and peer observability on subordinates' misreporting choices. We adopt a participative budgeting setting in which two subordinates report to one superior, and we manipulate vertical pay dispersion (low/high) and peer observability (absent/present). Subordinates have private information about actual project costs and can over-report project costs to the superior without detection and thus create budgetary slack. When a peer's reporting choices are observable, we predict and find that peer reporting choices have an asymmetric influence on the focal subordinates' reporting choices, and this asymmetric influence depends on the level of vertical pay dispersion. Specifically, we find that when vertical pay dispersion is low, subordinates who observe peer reports containing low slack misreport less, whereas observing peer reports that contain high slack has no significant effect. However, when vertical pay dispersion is high, subordinates who observe peer reports containing high slack misreport more, whereas observing peer reports that contain low slack has no significant effect. Driven by these asymmetric effects, subordinates misreport less in the presence of peer observability than in its absence when vertical pay dispersion is low and misreport more in the presence of peer observability than in its absence when vertical pay dispersion is high. Overall, our findings suggest that when a firm has a more egalitarian pay structure (i.e., low vertical pay dispersion), an open information policy is conducive to a more honest reporting environment, whereas under a more hierarchical pay structure (i.e., high vertical pay dispersion), open information policies can compromise the honesty of subordinates' reports.     

下级对上级的情绪劳动会引起工作倦怠吗？

不管任何工作，只要涉及人际互动，员工都可能需要进行情绪劳动，情绪劳动影响员工的工作行为已是共识。过去的情绪劳动研究多涉及员工与顾客之间，后发展至上下级之间，但主要基于领导的视角，下级对上级的情绪劳动研究较少。按照资源保存理论，员工的情绪劳动是对自己内部资源的一种损耗，需要员工进行情绪调节与改变行为，下级对上级的情绪劳动对工作倦怠有影响。对通过问卷调查获得的237份样本进行实证分析，结果发现：下级对上级情绪劳动的表层行为对工作倦怠的情绪衰竭、去个性化有正向预测作用，对低成就感的影响不显著；下级对上级情绪劳动的深层行为与自然表现对工作倦怠的情绪衰竭、去个性化、低成就感均有负向预测作用。     

Discussion of “The Effects of Vertical Pay Dispersion: Experimental Evidence in a Budget Setting”

Guo, Libby, and Liu (2017) (hereafter GLL), examine how pairs of experimental subjects interact in a game framed as a funding request from a privately informed subordinate to a superior. When the superior's pay is higher than the subordinate's, subordinates display more self‐serving dishonesty and superiors are more tolerant of it than when their pay is the same. In this discussion, I compare GLL's design with an ultimatum game, consider additional tensions that arise in pay‐level comparisons, address the applicability of their results, and suggest some extensions. I conclude by calling for new theory that regularizes GLL's surprising findings.     

Managing Perceptions of Technical Competence: How Well Do Auditors Know How Others View Them?*

We investigate factors that influence an auditor's accuracy in knowing how subordinates, peers, and superiors view his or her own technical competence (metaperception). Extant literature on reputation management in auditing contexts depicts preparers of audit workpapers as strategic agents (subordinates) who stylize workpapers and engage in behaviors that enhance their reputations with reviewers (superiors). These superiors, in turn, are represented as strategically engaging in coping behaviors in response to such stylization attempts. One of the necessary conditions for auditors to enhance their reputations on a sustainable basis is accurate metaperception. We report the results of an experiment that investigates determinants of auditors' metaperception accuracy. Our participants comprise teams of audit partners, managers, and seniors who work together in the field. Each auditor performs two tasks of varying complexity and then predicts whether other team members can accurately perform the task and how other team members assess his or her performance on the tasks. Results show that accuracy in knowing what others think of one's technical proficiency (metaperception) is generally high, particularly when the predictor auditors are partners and managers; however, metaperception accuracy is asymmetric and varies depending on the predictor auditor, the target auditor being predicted, and task complexity. Implications are discussed.     

Compensation negotiation and corporate governance: the evidence from China

This paper examines CEO pay dispersion for the listed companies in China. We apply a two-tier stochastic frontier model to the CEO compensation framework where asymmetric information generates a surplus between the minimum wage that CEOs accept and the maximum payment that firms offer. This surplus leads to CEO pay dispersion coming from the negotiation power between the CEO and the firm. We generate the surplus extracted by each CEO-firm pair and analyze how corporate governance affects them. An empirical analysis finds that: (1) On average, CEOs are paid 23.26% more than the benchmark; (2) additionally, we examine the bargaining power in state-owned enterprises (SOEs) and non-state-owned enterprises (non-SOEs). We find that CEOs in SOEs have less bargaining power due to compensation regulations. We then examine compensation for new CEOs hired externally and find that CEOs hired externally have less bargaining power on average; and (3) corporate governance has a significant effect on the salary bargaining power of each agent. More specifically, the CEO-Chairman dummy has a significant positive effect on the bargaining power of firms and CEOs, but the latter is larger. Board size has a negative effect on both. Independent directors help improve the bargaining power of the firms and board meeting times help enhance the bargaining power of the CEOs. Equity concentration has a significant negative effect on both sides.     

Additional Information in Accounting Reports: Effects on Management Decisions and Subjective Performance Evaluations Under Causal Ambiguity

Organizations have often been criticized for reliance on a single item of accounting information (e.g., profit) in evaluating performance, because of its incompleteness. We provide theory‐based experimental evidence that under frequently occurring performance‐evaluation conditions (subjective performance evaluation, causal ambiguity, and individual differences in cognitive ability, knowledge, and/or motivation that lead to different interpretations of information), reliance on a single item of accounting information (profit), rather than profit plus additional (e.g., nonfinancial or external) information, can provide two potential benefits which offset the costs of information incompleteness. First, subordinates are more likely to make the management decisions that superiors will evaluate and reward highly—that is, there are fewer coordination failures in management decisions. Second, even after controlling for the presence or absence of coordination failures, subordinates experience less negative surprise about their performance evaluations.     

DOES INDONESIA HAVE A 'LOW PAY' CIVIL SERVICE?

Government officials and policy analysts maintain that Indonesia's civil servants are poorly paid, and have been for decades, a conclusion that is supported by anecdotal evidence and casual empiricism. In this paper, the relationship between government and private compensation levels is systematically analysed using evidence from two large household data sets, the 1998 Sakernas and the 1999 Susenas. The results suggest that government workers with a high school education or less, representing three-quarters of the civil service, earn a pay premium over their private sector counterparts. Civil servants with more than a high school education earn less than they would in the private sector but, on average, the premium is far smaller than is commonly alleged, and is in keeping with public/private differentials in other countries. The results prove robust to varying econometric specifications and cast doubt on the proposition that low pay is an explanation for government corruption.     

The Effect of Dismissals Protection on Employment: More on a Vexed Theme

This paper presents new results on the relationship between severance pay and labor market performance for a sample of 21 OECD countries, 1956-1984. Specifically, it evaluates Lazear's empirical argument that severance pay reduces employment and elevates joblessness. His findings are shown not to survive correction for errors in the data and the application of correct estimation procedures. Furthermore, adverse labor market consequences of severance pay are not detected in a dynamic characterization of the Lazear model. Limitations of the approach followed here are also addressed and contextualized.     

The Influence of Mood on Subordinates’ Ability to Resist Coercive Pressure in Public Accounting

This study reports on an experiment conducted to assess the influence of different affective mood states on auditors’ ability to resist obedience pressure to commit or overlook unethical acts in six audit contexts. Obedience pressure from superiors to comply with unethical directives is of particular concern in public accounting, given the hierarchical structure of audit teams and the power imbalance in superior–subordinate relationships. One hundred and seventy audit seniors from two large international public accounting firms participated in an experiment. Three different moods were induced in participants through work‐related trigger events: one positive active mood state (arousal) and two negative passive mood states (fear and insignificance). These mood states were anticipated to influence auditors’ expressed willingness to comply with their superiors’ unethical directives as set forth in our ethical scenarios. Our results indicate that low levels of arousal and high levels of fear and insignificance influenced compliance intentions. Our results also indicate overall high levels of expressed willingness to comply with superiors’ unethical directives. Implications of our findings for understanding the antecedents of unethical conduct within the accounting profession and for future research are discussed.     

The Influence of Affect on Managers' Capital‐Budgeting Decisions*

In this paper, we propose that affective reactions are integral to accounting decision contexts like capital budgeting, and that researchers must jointly consider affect and cognition to better understand accounting decision makers' behavior. We argue that interpersonal relationships are characteristic of many capital‐budgeting contexts, and that these relationships can lead to emotional affective reactions. For example, reactions such as frustration and anger may result if a manager is treated unfairly by another individual involved in a capital project. Drawing on relevant work in neurobiology and psychology, we then predict that these affective reactions can influence managers' capital‐budgeting decisions. We report on four experimental scenarios that demonstrate the impact of affective reactions on capital‐budgeting decisions. Consistent with our predictions, the results indicate that managers consider both financial data and affective reactions when evaluating the utility of an investment alternative. Our results suggest that researchers should consider both affect and cognition to more fully understand decision making in accounting contexts.     

Budgeting in Times of Economic Crisis

This article examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that budgeting became more important for planning and resource allocation but less important for performance evaluation in companies affected more strongly by the 2008 economic crisis. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises.     

The Role of Narcissistic Hypocrisy in the Development of Accounting Estimates

In an experiment including experienced managers, we investigate how supervisor and subordinate narcissism influence a supervisor's review of a subordinate's accounting estimate. While narcissistic supervisors express greater liking for narcissistic subordinates (narcissistic tolerance), they nonetheless reject and revise the accounting estimates of narcissistic subordinates to a greater extent than they reject estimates of non-narcissistic subordinates (narcissistic hypocrisy), even when doing so inhibits the supervisor's ability to reach a profit target. Our findings contribute to extant research in accounting and psychology. We demonstrate that narcissistic hypocrisy extends beyond the evaluation of others and alters narcissists' willingness to rely on other narcissists in a meaningful financial reporting decision. We also find that narcissistic hypocrisy is robust across age, gender, and supervisory experience.     

Job Allocation Rules and Sorting Efficiency: Experimental Outcomes in a Peter Principle Environment

An important issue in personnel economics is the design of efficient job allocation rules. Firms often use promotions both to sort workers across jobs and to provide them with incentives. However, the Peter Principle states that employees' output tends to fall after a promotion. Lazear (2004) suggests that self‐selection may improve job allocation efficiency while preserving incentive effects. We reproduce this Peter Principle in the laboratory and compare the efficiency of a promotion standard with subjects self‐selecting their task. We find no evidence of effort distortion, as predicted by theory. Furthermore, we find that when the Peter Principle is not severe, promotion rules often dominate self‐selection efficiency of task assignment. Results are consistent with imperfect appraisal of transitory ability and a lack of strategic behavior.     

领导成员交换对酒店员工的服务创新行为的影响——以组织信任为中介变量

创新是引领发展的第一动力,员工的创新行为是企业持续发展和提升竞争力的关键所在。以社会交换理论为基础,基于286份酒店员工问卷构建结构方程模型,实证探究领导成员交换对酒店员工服务创新行为的影响及其作用机制。结果表明：领导成员交换和组织信任对酒店员工的服务创新行为存在显著正向影响;组织信任在领导成员交换和员工服务创新行为之间起到中介作用。该研究能够丰富上下级关系和员工服务创新行为的相关研究成果,对于改进酒店行业的管理实践也具有一定的现实意义。     

How Do Long‐Shot Outcomes Affect Preferences for Climate‐Change Mitigation?

This article takes a fresh look at how public uncertainty influences willingness to pay (WTP) for climate‐change mitigation programs. I elicit subjective distribution functions over future global mean temperatures and WTP for mitigation. I find, not surprisingly, that subjects, on average, view climate change as a “bad,” and the higher the expected temperature increase they perceive, the more they are willing to pay for mitigation. Subjects are generally risk averse, so that they are WTP more for mitigation programs when the outcome of the program is more certain. The skew of the subjective climate‐change distribution also affects preferences, so that aversion to catastrophic outcomes is an important component of WTP for mitigation. I find that models that ignore skew are likely to underestimate the influence of uncertainty on willingness to pay for climate‐change mitigation.     

Product price differences across countries: determinants and effects

A substantial part of international differences in prices of individual products, both goods and services, can be explained by differences in per capita income, wage compression, or low wage dispersion among low-wage workers, and exchange rate fluctuations. Higher per capita income is associated with higher prices and higher wage dispersion with lower prices. The effects of higher income and wage dispersion are moderated for the more tradable products. The effects of wage dispersion, on the other hand, are magnified for the more labor-intensive products, particularly low-skill services. The differences in prices across countries are reflected in differences in the composition of consumption. Countries in which prices of labor-intensive services are very high, such as the Nordic countries, consume much less of them. For some services, the shares of GDP consumed in high-price countries are less than 20% of the shares in low-price countries. Since these are services of very low tradability, the low consumption levels of these services imply low employment in them.     

Skill compression, wage differentials, and employment: Germany vs the US

Germany's more compressed wage structure is widely viewed asthe main cause of the German-US difference in employment andunemployment, but part of the compression is due to Germanyhaving a narrower distribution of skills than the US. Even adjustedfor skills, however, we find that Germany has a more compressedwage distribution than the US. But relatively little of theUS-German employment difference can be attributed to the compressedwage distribution. We find that jobless Germans have nearlythe same skills as employed Germans and look more like averageAmericans than like low skilled Americans, which runs counterto the wage compression hypothesis. Given these patterns, thepay and employment experience of low skilled Americans is apoor counterfactual for assessing how reductions in pay mightaffect jobless Germans.     

The Impact of the Bullwhip Effect on Sales and Earnings Prediction Using Order Backlog

Recent work in the supply chain literature suggests that the variance in orders placed with suppliers will be larger than that of sales to buyers. This distortion in demand information increases as it is passed along the supply chain from customers to upstream suppliers and has been referred to as “the bullwhip effect.” In this paper, we argue that the bullwhip effect reduces the ability of order backlog to predict future sales and earnings for upstream suppliers. Results obtained from our empirical analysis support this proposition. We find that the impact of bullwhip on the predictive ability of order backlog is further accentuated in firms with longer operating cycles. Market intermediaries such as financial analysts, on average, are unable to fully account for differences in the predictive ability of order backlog. However, analysts belonging to employers that follow all firms in a vertical supply chain do a better job of understanding the impact of bullwhip on the predictive ability of order backlog. In additional tests, we find that the bullwhip effect also impedes the ability of inventory components to predict future sales and earnings.     

Discretion in Financial Reporting: The Voluntary Disclosure of Compensation Peer Groups in Proxy Statement Performance Graphs*

We examine the 49 Standard & Poor's (S&P) 500 firms that voluntarily disclosed in their 1993 proxy statements, the composition of the comparison group used by each board's compensation committee to set executive compensation policies. We hypothesize that the net benefits of this disclosure are largest when (1) there is a high degree of stakeholder concern about compensation, (2) compensation policies are defensible, and (3) corporate governance is strong. Consistent with our stakeholder concern prediction, disclosing firms have higher compensation levels and are more apt to have received prior shareholder proposals about executive compensation. Contrary to this prediction, we find a negative association between financial press coverage of compensation policies and the probability of disclosure. Additionally, the disclosure decision is unrelated to the defensibility of compensation policies and the firm's corporate governance profile. Industry-adjusted firm performance, managerial entrenchment, CEO tenure, institutional holdings, and compensation committee independence variables are insignificant. We also compare the financial performance and compensation practices of compensation peers to two yardsticks — performance and pay practices at the sample firms and the corresponding S&P industry index firms. The compensation levels of compensation peers exceed those of the firms in the corresponding S&P industry indexes. Because (1) compensation levels and performance sensitivities at sample firms are more similar to those at compensation peers than to those at S&P industry index firms, and (2) the superior financial performance and higher performance sensitivities of disclosing firms justify high pay, this evidence suggests that the compensation peers of disclosing firms are an appropriate comparison group.     

The Effects of the Tax Cuts and Jobs Act of 2017 on Defined Benefit Pension Contributions*

This study examines the effect of the Tax Cuts and Jobs Act of 2017 (TCJA) on corporate defined benefit pension contributions. The TCJA decreases the corporate tax rate from 35 percent in 2017 to 21 percent in 2018 and thereafter. This change incentivizes firms to increase 2017 pension contributions to take advantage of tax deductions at a higher rate. Consistent with this incentive, we find firms increase defined benefit pension contributions by an average of 25 to 31 percent in 2017 compared with earlier years. We also find that taxpaying firms are the primary contributors. Further, taxpaying firms with high levels of pension-related deferred tax assets contribute over three times as much as taxpaying firms with low levels of pension-related deferred tax assets. We also find firms that increase pension contributions in 2017 reduce 2018 contributions, consistent with intertemporal income shifting rather than a permanent change in pension funding strategy.