Many organizations rely on performance evaluation processes where employees are assessed by multiple raters and final decision rights about employees’ ratings are allocated to calibration committees. Using proprietary data from an organization that employs multi-rater evaluation and calibration, we investigate how supervisors aggregate multi-rater assessments and how committees calibrate the resulting evaluations. We find that when aggregating multi-rater assessments, supervisors place more weight on more informative assessments – but this holds true only when their cognitive load is not too high. For calibration, we find that committees are less likely to adjust supervisors’ aggregation decisions (i) if they are consistent with more informative multi-rater assessments and (ii) when supervisors’ justifications of their decisions are well substantiated. Notably, we find that cognitive load affects calibration committees differently than supervisors. That is, we find that calibration committees appear to focus their attention specifically on information that might not have been (completely) incorporated.

New digital technologies allow companies to provide employees with performance feedback in real-time. We investigate the causal effects of such real-time feedback on individual effort and the quality of initial (pre-feedback) and final (post-feedback) decisions by exploiting a natural quasi-experiment in the setting of professional soccer refereeing. Our results suggest that real-time feedback has differential effects for experienced compared to inexperienced agents. Specifically, we find some evidence that experienced agents decrease their effort under real-time feedback without harming the quality of their initial decisions. This results in better final decisions because real-time feedback allows agents to correct wrong initial decisions upon feedback. In contrast, inexperienced agents increase their effort, but make worse initial decisions. Upon feedback, they manage to compensate for their increased number of wrong initial decisions, but see no improvement in the quality of final decisions.

This study investigates the individual performance consequences of adopting unrewarded group relative performance information (RPI). Using proprietary data from a non-profit clinic, we exploit the staggered feature of the adoption of unrewarded group RPI on a reporting task and find that performance increases by 55.5 % when physicians are provided with group RPI. This overall improvement in performance can be divided into the initial treatment effect (10.5 %) and marginally decreasing improvements in performance (starting from 7.8 % per month) over time. Furthermore, we find significant variation in the improvement of performance, which is dependent on (1) the prior performance rank of the group, (2) the size of the group and (3) the task heterogeneity within the group. In sum, our study implies that group RPI can be effective in eliciting higher individual performance even when performance is not tied to financial incentives, and that the effectiveness of such group RPI is dependent on the conditions under which group RPI is implemented.

This study examines how communication drives cost reporting decisions in autonomous teams. Through a series of three experiments, we analyze how members of autonomous teams use communication to influence each other and steer their team’s reporting decisions. Our first two experiments show evidence of a dishonesty shift, where initially dishonest team members infect initially honest team members, but the latter fail to discipline the former. In the third experiment, which reduces the social distance between the firm’s owners and team members, we find no evidence of the dishonesty shift anymore. Jointly, our findings are consistent with social norm theory, which predicts that communication can increase team misreporting depending on the salience of different situational cues. Our study offers various contributions to the participative budgeting and dishonesty literature.

This paper investigates the performance effects of narrative feedback. We build on cognitive self-regulation theory to predict how two important characteristics of narrative feedback (specificity and causal language use) influence self-regulation and thereby affect performance when used in feedback on strengths and weaknesses. We test our predictions using field data from a European e-commerce firm, and we find that higher specificity in feedback on strengths can positively affect performance, consistent with improved self-regulation due to more systematic exploration. In con-trast, higher specificity can adversely affect performance when used in feedback on weaknesses. Furthermore, we find that higher causal language use in feedback on weaknesses can have positive performance effects, consistent with improved self-regulation due to increased understanding and sensemaking. In contrast, causal language use can also have adverse effects when used in feedback on strengths. In additional analyses, we show that narrative feedback effects depend on the gap between the employee’s and the firm’s performance standard and further show that narrative feed-back characteristics can lead to improvement in the performance dimensions that are the focus of the feedback. In sum, our findings advance our understanding of whether and how narrative feed-back can be valuable for employee development.

This paper studies the relationship between client importance and audit quality for small and medium sized audit practices (SMP). We mobilize the German setting, where SMP client importance can be measured precisely and analyzed for public interest entity (PIE) clients. Our results show that common measures of economic dependence severely overestimate the actual dependence of SMPs. Relying on our precise measurement, we find a positive non-linear relationship between dependence and audit quality. Our results demonstrate that as long as client importance does not exceed critical thresholds, SMPs provide higher audit quality to more important PIE clients. In fact, we find that clients engage in less accrual-based earnings management (AEM) until reaching high client importance thresholds, at which point the relationship reverses. Furthermore, our results suggest that clients might trade off AEM with real earnings management (REM), supporting the notion that providing higher audit quality could also have detrimental effects. In additional analyses, we show how SMPs protect themselves against PIE client independence threats, thus further explaining why SMPs can deliver high-quality audits as dependence increases. Finally, we find that our results are robust and even stronger when relying on de-facto office and partner level analyses and using measures of extreme earnings management.

Prior research on voluntary disclosures has long debated whether managers tend to withhold bad news. However, these studies have been conducted in settings in which, ex-ante, the trade-off between the potential benefits and the potential costs of withholding information is obscure. In this paper, we study voluntary disclosure choices using a context-rich setting of distressed firms in which potential benefits from withholding news (particularly bad news) are seemingly high, whereas the potential costs are seemingly low. Specifically, we focus on the question of how ‘going concern’ uncertainty affects management earnings forecasts in financially distressed firms. Our results suggest that as financial distress intensifies, there is a lower likelihood and frequency of management earnings forecasts, indicating that managers may be withholding news, particularly bad news, in distressed firm-years. For comparative purposes, we also present results for ‘safe’ firm-years and find that managers have a tendency to disclose bad news as the financial health of the firm worsens.

The contemporary transparency narrative has recently evolved from a predominantly bright side of positive motivational influence to a more nuanced narrative integrating a potential dark side of transparency of demotivating threats to individual information privacy. Based on this more nuanced narrative, we try to provide a first empirical picture relying on an integrated model of direct and indirect psychological consequences of individual performance transparency. We propose a ‘bright’ path between transparency and psychological empowerment and a parallel ‘dark’ path through information privacy concerns. Using panel survey data of 401 employees of the finance function and structural equation modeling, we find that transparency has both a direct and indirect link to psychological empowerment. Taking a closer look at the dark path, we find that the link between transparency and information privacy concerns is moderated by core self-evaluation and relative performance information advantage. In contrast, we do not find a moderating effect of individual performance. With this study, we contribute a novel conceptual integration and first empirical examination of this duality of psychological consequences of transparency of individual performance. Additionally, we enrich the debate about potential moderating factors. Overall, we offer a more nuanced perspective on the value of transparency of individual performance in organizations.