The contract selection effects of performance evaluation error and disclosure policy: An application in public accounting.

Persistent Link:
http://hdl.handle.net/10150/186971
Title:
The contract selection effects of performance evaluation error and disclosure policy: An application in public accounting.
Author:
Sayre, Todd Lamson.
Issue Date:
1994
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
When faced with various contract options, better workers self-select to those that pay according to performance (Salop and Salop 1976; Demski and Feltham 1978; Guasch and Weiss 1980; Chow 1983; Waller 1985; Waller and Chow 1985; Dillard and Fisher 1990). Similarly, this study suggests that public accounting firms, characterized by up-or-out contracts where workers are promoted or terminated based on the relative rank of their performance, design contracts that will attract better workers. This study hypothesizes that a low-skill worker's expected value of an up-or-out contract: (Hypothesis H1) is positively related to the error associated with employee performance measurement and (Hypothesis H2) is lower when the performance of terminated workers is disclosed versus when it is not. As a consequence of reducing the expected value, low-skill workers will tend to select other contracts. Hypothesis H1 is related to the analytical implications of tournament research by Nalebuff and Stiglitz 1980; Lazear and Rosen 1981; O'Keeffe, Viscusi, and Zeckhauser 1984; McLaughlin 1988). Two experiments were used to test the hypotheses. Both asked subjects to compare and state their preferences regarding two contracts; however, the first emphasized control while the second emphasized mundane realism. The data of both experiments strongly supported hypothesis H1. In the second experiment, this support was stronger yet for the responses of the subject's with the more extreme skill ratings. Results related to hypothesis 2 of the first experiment were weakly significant and of the second experiment were significant but opposite from the prediction.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Accounting.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Business Administration; Graduate College
Degree Grantor:
University of Arizona
Committee Chair:
Waller, William

Full metadata record

DC FieldValue Language
dc.language.isoenen_US
dc.titleThe contract selection effects of performance evaluation error and disclosure policy: An application in public accounting.en_US
dc.creatorSayre, Todd Lamson.en_US
dc.contributor.authorSayre, Todd Lamson.en_US
dc.date.issued1994en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractWhen faced with various contract options, better workers self-select to those that pay according to performance (Salop and Salop 1976; Demski and Feltham 1978; Guasch and Weiss 1980; Chow 1983; Waller 1985; Waller and Chow 1985; Dillard and Fisher 1990). Similarly, this study suggests that public accounting firms, characterized by up-or-out contracts where workers are promoted or terminated based on the relative rank of their performance, design contracts that will attract better workers. This study hypothesizes that a low-skill worker's expected value of an up-or-out contract: (Hypothesis H1) is positively related to the error associated with employee performance measurement and (Hypothesis H2) is lower when the performance of terminated workers is disclosed versus when it is not. As a consequence of reducing the expected value, low-skill workers will tend to select other contracts. Hypothesis H1 is related to the analytical implications of tournament research by Nalebuff and Stiglitz 1980; Lazear and Rosen 1981; O'Keeffe, Viscusi, and Zeckhauser 1984; McLaughlin 1988). Two experiments were used to test the hypotheses. Both asked subjects to compare and state their preferences regarding two contracts; however, the first emphasized control while the second emphasized mundane realism. The data of both experiments strongly supported hypothesis H1. In the second experiment, this support was stronger yet for the responses of the subject's with the more extreme skill ratings. Results related to hypothesis 2 of the first experiment were weakly significant and of the second experiment were significant but opposite from the prediction.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectAccounting.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineBusiness Administrationen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.chairWaller, Williamen_US
dc.contributor.committeememberSevcik, Galenen_US
dc.contributor.committeememberSchatzberg, Jeffen_US
dc.identifier.proquest9517581en_US
dc.identifier.oclc701106830en_US
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