Utilizing Incentives and Accountability: In Control in Control?
Address delivered at the occasion of accepting the appointment as Professor of Accounting & Incentives, Erasmus University Rotterdam, at the Rotterdam School of Management, Erasmus University Rotterdam on Friday September 20, 2019
Objectivity and transparency are often considered to be desirable attributes of a performance measurement and incentive system. Subjectivity, on the other hand, is typically equated with bias and has a negative connotation. But accounting research shows us that a degree of subjectivity, in other words, allowing leeway for supervisors’ judgments in evaluations, is usually optimal. I argue that we should switch to the term ‘discretion’, to be better able to communicate its benefits. Moreover, I discuss the benefits and costs of discretion and of transparency. I surmise that a balance between objectivity and discretion is required, and that transparency is definitely not always desirable. Furthermore, I discuss how discretion relates to the way in which managers are held accountable. Holding managers accountable for outcomes is not always optimal, yet pervasive. Finally, I outline future research opportunities on discretion and accountability, apply the insights about performance measurement to the academic working environment, and promote the use of new research methods.
|Keywords||prestatiebeoordeling, transparantie, objectivity, subjectivity, discretion, incentives, accountability, transparency, performance evaluation, measurement system, management control, management accounting|
|JEL||Accounting (jel M41)|
|Series||ERIM Inaugural Address Series Research in Management|
van Rinsum, M. (2019, September 20). Utilizing Incentives and Accountability: In Control in Control?. ERIM Inaugural Address Series Research in Management. Retrieved from http://hdl.handle.net/1765/120287