Knowledge that Transforms

Next article FreeRecent RefereesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreJournal of Political Economy acknowledges the assistance of:Martin AbelHunt AllcottNabil Al-NajjarOmar Al-UbaydliFelipe AlvesDiego AmadorIsaiah AndrewsJose ApesteguiaDavid ArgenteTimothy ArmstrongEnghin AtalayJesper BaggerFelix BierbrauerDan BlackAlessandro BonattiStéphane BonhommeAline ButikoferSteven CallanderAlexander CappelenHector ChadeMons ChanCheng ChenKuan-ming ChenStijn ClaessensTodd ClarkAlain CohnZack CooperDora CostaDecio CovielloLevi CrewsMichael CunaVilsa CurtoErnesto Dal BóEduardo DavilaSteven DavisAdeline DelavandeErika DeserrannoJonathan DingelJeff DominitzJoseph DoyleAnna Dreber AlmenbergNiklas EngbomFederico EspositoItzik FadlonDavid FiglioMarco FrancesconiAlexander FrankelYana GallenJorge Luis GarcíaAlex GershkovGerd GigerenzerKenneth GillinghamXavier GiroudLaurent GobillonBart GolsteynErick GongMarco Gonzalez-NavarroNiels GormsenSanjeev GoyalPaul GriecoCristina GualdaniMarina HalacDaniel HamermeshTarek HassanDaniel HauserVivian HoPär HolmbergHans HvideShota IchihashiFedor IskhakovKoichiro ItoSimon JaegerGregor JaroschYunan JiVishal KamatEthan KaplanJakub KastlJudd KesslerMatthias KredlerSebastian KripfganzEtienne LaléMichael LamlaRasmus LandersøAndreas LeibbrandtArthur LewbelAnnie LiangIlse LindenlaubAttila LindnerElliot LipnowskiAdriana Lleras-MuneyMatt LoweDaniel McMillenEnrique MendozaGiordano MionAntonio MirallesFatemeh MomeniCorina MommaertsEduardo MoralesGiuseppe MoscariniJack MountjoyRichard MurphyZvika NeemanDavid NeumarkKirby NielsenLuigi PacielloWilliam ParkerErnesto PasténJacopo PeregoEduardo Perez-RichetNicola PersicoArnaud PhilippeThomas PhilipponMaría PradosAndrea PratNancy QianOddbjørn RaaumSergio RebeloMari RegeSteven RivkinVictor RondaMark RosenzweigSutanuka RoyElisa RubboMichael RubensNicholas RyanRaffaella SadunJames SalleeTobias SalzMario SamanoPedro Sant’AnnaMariel SchwartzTimothy SimcoeShruti SinhaVasiliki SkretaAlex SmolinIsaac SorkinPedro SouzaJan StuhlerAmir SufiBalázs SzentesFlorian SzücsJames TrainaPeter TroyanChristine ValenteVenky VenkateswaranLise VesterlundLukas VogelTom VoglChristian VosslerMark WatsonMatthijs WildenbeestDavid YangKai Hao YangJiro YoshidaJun ZhangJunsen ZhangJidong Zhou Next article DetailsFiguresReferencesCited by Journal of Political Economy Volume 129, Number 12December 2021 Article DOIhttps://doi.org/10.1086/718225 Views: 628Total views on this site © 2021 The University of Chicago. All rights reserved.PDF download Crossref reports no articles citing this article.

Previous article FreeJPE Turnaround Times, Previous Two YearsPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMoreJPE Turnaround Times, Previous Two Years Outcome of 1st Round DecisionsMean Days to DecisionMedian Days to DecisionDecision Later than Six Months after Submission (as percentage of decisions within decision type)Desk Rejection54%970%Reject with Reviews39%12110515%Revise8%19517248%Average time from original submission to acceptance (omitting time with author in revision) = 420 daysView Table Image Previous article DetailsFiguresReferencesCited by Journal of Political Economy Volume 129, Number 11November 2021 Article DOIhttps://doi.org/10.1086/717276 Views: 776Total views on this site © 2021 The University of Chicago. All rights reserved.PDF download Crossref reports no articles citing this article.

We examine executive bonus contracts in corporate bankruptcies. Introduced in 2005, Section 503(c)(1) of the United States' Chapter 11 corporate bankruptcy code regulates key employee retention plans (KERPs) but does not restrict performance incentive plans (PIPs). We find that, following the adoption of this reform, the likelihood of approval of KERPs and their coverage decrease, while those of PIPs increase. Unintended consequences of the reform include lower operating performance for PIPs and decreases in reorganization efficiency for bankrupt firms adopting KERPs or PIPs. Our results are consistent with the idea that KERPs were rent-extraction tools, which contrasts with prior evidence. PIP pay-performance link weakens after the reform, due to an increase in adoption of zero-performance thresholds and more discretion given to debtors over bonus pay. This suggests that watering down of PIPs' incentives may have re-introduced the rent extraction that the reform sought to eliminate. We conclude that the regulation of bonuses in bankruptcy should consider debtors’ reactions to such reforms.

Our study examines whether implementing a novel approach for incentivizing employees to engage in behavior desired by the company is associated with changes in employee behavior. We use proprietary data from a company using an online learning platform where employees could voluntarily participate in daily training. Employees who complete daily training modules and correctly answer quiz questions earn points that can be used to bid on gift cards through an online auction site. The company subsequently activated an option of allowing employees to also use their points to play an online slot machine with the possibility of winning the same gift cards available through the online auction site. Using psychology theory we predict that the arousal and excitement experienced from playing an online slot machine will lead to a positive association between the extent to which employees play the slot machine and the increase in: (1) the number of daily training modules they complete; and (2) the effort they exert to perform well on the related quizzes after the slot machine was introduced. Although the results support both of our predictions, we also find a significant decrease in the number of daily training modules completed by employees who chose not to play the slot machine as well as declines in both interest in playing the slot machine and training activity over time for employees who played. Overall, the effectiveness of implementing an online slot machine game on improving employee behavior seems short-term and limited to a sub-set employees who play, and may even generate negative effects for other employees who do not play. We identify implications for theory and practice.

Both management bias and measurement imprecision threaten the accurate reporting of complex accounting estimates, yet audit policymakers and practitioners often place a strong emphasis on bias. I examine whether directing auditors’ attention towards management bias can come at the expense of insufficient auditor sensitivity to measurement imprecision, potentially threatening overall audit quality. My primary investigation, Study 1, finds that when managers’ explicit incentives to bias financial reports are relatively weaker, an imbalanced emphasis on bias causes auditor-like participants in a stylized setting to “lower their guard” to a greater extent than when environmental factors place a more balanced emphasis on bias and imprecision. Study 2 indicates that an imbalanced emphasis on imprecision does not similarly distract auditors from bias. Study 3 utilizes a more contextually rich setting and demonstrates that an imbalanced emphasis on bias prompts even professional auditors to neglect imprecision. Accordingly, this paper suggests that a balanced emphasis on both management bias and measurement imprecision can mitigate negative consequences of auditors focusing on the former and neglecting the latter.

Accounting studies document that performance evaluations may cause evaluatees to experience job-related stress and suggest there is a positive relationship between the frequency of such evaluations and stress. In this paper we aim to modify this suggestion. Since performance evaluations also involve a periodic discharge of accountability for evaluatees, we expect that low evaluation frequency may cause stress as well. Drawing on the neurobiological literature on allostatic load, we argue that the prolonged anticipatory threat of being held accountable adds to stress buildup over time. Such buildup is often not consciously experienced but shows in hormonal patterns that are associated with delayed job-related dysfunctions such as burnout. We conducted a one-year field experiment, in which we observed enhanced stress-hormone levels (cortisol and thyrotropin) in participants assigned to a 12-week performance evaluation cycle compared to participants remaining in a 6-week cycle. We found no corresponding difference between conditions on self-reported mental fatigue. This confirms our expectation and suggests that adopting a neurobiological view of job-related stress provides a complementary account of the effect of performance evaluation on both immediately experienced and delayed manifestations of job-related stress.

The received narrative about accounting organisation largely originates from within the walls of the profession, assuming closure, and is not sufficiently informed by an understanding of the actions, experiences and perspectives of those who did not engage in the professional project. Our data offer another perspective, that of the majority of accountants in the field, who prospered for a prolonged period without pursuing strategies of closure or seeking a corporate identity. With a Bourdieusian framing, we explore a rich dataset of almost 3000 individual records from the 1901 and 1911 Irish censuses, supplemented by professional records and trade directories, to examine the diversity of the accounting field in Dublin. Our exploration of this cohort, largely hidden from history, reveals a majority of accountants acting independently in the field, with no strategies to act in concert or to erect occupational barriers to entry. The small minority of accountants pursuing professionalisation came from a background that was already elite. However, in a late colonial context with a weakened state, this broader group of accountants did not present as either excluded or subaltern. Instead, what emerges is evidence of a wider cadre of “Plain” accountants displaying a level of economic progress over a ten-year period that outstrips that of their professionalised peers. Conscious of the ‘imprecision of hierarchies’ in the field (Bourdieu 1988, p. 20), this allows us to consider the role of ‘accountant’ separate from the idea of professional accreditation and to question the seeming inevitability of their conflation.

We experimentally investigate how increases in legally required minimum wages affect wage offers, wage premiums (i.e., the excess of wages over the minimum wage), and employee effort. Prior research has documented a gift-exchange relationship between firms and employees, whereby higher wage offers lead to higher effort. However, when the minimum wage increases, expectations regarding gift wages may also change. We predict that, following such a change, firms and employees will self-servingly determine their reference point for gift wages. As a result, while firms will increase wage offers, wage premiums will decline, and thus employees will not increase their effort. The results of (1) a laboratory experiment and (2) two online experiments are consistent with our predictions, suggesting that minimum-wage increases can have a negative effect on employee effort. Ultimately, employees respond to equivalent wages differently depending on the context surrounding the wage level. Implications for theory and practice are discussed.

We study the relation between a manager’s growth mindset and their use of resource management practices. Growth mindset is based on implicit person theory and is an established and measurable psychological construct. It refers to a person’s deeply held beliefs about whether, in general, people can learn, develop, and change throughout their lives or whether “who they are” is relatively fixed by initial talent endowments (termed a ‘fixed mindset’). Given the demonstrated importance of a growth mindset for educational outcomes and the emerging research studying the influence of mindset on behavior within organizations, we explore whether school principals’ mindset is associated with their resource management practices. Using survey and archival data from 257 primary and secondary school principals, we find that a growth mindset is associated with greater use of budgets to explain and discuss budget variances with key constituents and as an enabler in their managerial role. Principals with a growth mindset also engage in fundraising activities and use non-financial rewards for their teachers significantly more than fixed mindset principals. We also find that the relations between a principal’s mindset and some of these practices are different depending on the school’s performance context.