ACCOUNTING


Knowing that you know: incentive effects of relative


ASIS MARTINEZ-JEREZ PROFESSOR


Cornell Peter and Stephanie Nolan School of Hotel Administration


Cornell SC Johnson College of Business Cornell University


performance disclosure Review of Accounting Studies, 28, 1, March 2023 LINK TO PAPER LINK TO VIDEO


Co-authors • Asis Martinez-Jerez


Professor, Cornell Peter and Stephanie Nolan School of Hotel Administration, Cornell SC Johnson College of Business, Cornell University


• Pablo Casas-Arce, Arizona State University • Carolyn Deller, Te Wharton School, University of Pennsylvania • Jose Manuel Narciso, Bionline, Valencia, Spain


Summary Workplace transparency is on the rise. Increasingly, individuals within—and


even those external to—an organization know what employees earn, how they perform, and how employees and external constituents view the organization on various dimensions. Tis paper studies differential employee responses to the public disclosure of individual performance information throughout an organization. In this case, Asis et al. studied data from a bank that decided in 2005 to make relative performance information available to all employees. Tis wor contributes to the growing body of research studying the effects of transparency by examining whether and how employee responses to the public disclosure of relative performance information within an organization (vis-à-vis private disclosure) differ depending on salient employee characteristics.


Te authors’ analysis suggests employees with a history of poor performance increase their output more than past good performers when rankings become public, and that more highly educated employees react more strongly to the change. Tey did not find systematic differences based on gender differences. Te authors argue that public disclosure is an important dimension to consid- er when designing a compensation system, because it will increase motivation to the extent that employees care about their colleagues’ perceptions of their productivity. Moreover, the effect should be stronger for employees whose colleagues expect them to have higher performance.


TO IMPACT CONTENTS


RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2023 EDITION


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