This study examines the revenue implications of satisfaction measures in a setting with multiple stakeholders. I obtain a proprietary database from a leading health insurance company that measures satisfaction levels of multiple stakeholders, including: (1) clients that purchase insurance plans for their employees, (2) patients who use the insurance plans, and (3) doctors who provide medical services. Using multi-stakeholder satisfaction data over a 20-quarter period, I find that satisfaction measures are multi-dimensional, and that future revenues are positively associated with certain, but not all, dimensions of client, patient, and doctor satisfaction. Drawing on stakeholder theory, I predict that the revenue implications of stakeholder satisfaction vary with the power of different stakeholder groups. Specifically, I examine the moderating effects of the percentage of voluntary patients, business unit age, and market penetration on the relation between stakeholder satisfaction and future revenues, finding evidence consistent with my prediction.

Many organizations whose core purpose is to advance a social mission pay employees below-market wages. We investigate two under-appreciated benefits of below-market pay in these social-mission organizations. In a series of experiments, we predict and find that, holding employees' outside opportunities constant, those attracted to social-mission organizations that pay below-market wages perform better individually and cooperate more effectively in teams than those attracted to social-mission organizations that pay higher wages. The individual performance effect arises because below-market pay facilitates the selection of value-congruent employees who are naturally inclined to work hard for the organizational mission. The team cooperation effect arises because employees expect team members who have selected a social-mission job that pays below market to be more value-congruent and, therefore, more cooperative than those who have selected a social-mission job that pays higher wages. Collectively, we demonstrate that in social-mission organizations, offering below-market pay can yield selection benefits.

In this study, we examine whether interacting hierarchical teams outperform nominal hierarchical teams in electronic brainstorming. Our hierarchical audit teams were composed of 111 managers and seniors from two Big 4 accounting firms. We compare fraud brainstorming outcomes between nominal and interacting teams for two tasks of varying complexity: a simpler task of fraud risk factor identification and a more complex task of fraud hypothesis generation. We find that nominal teams generate a significantly larger number of unique fraud risk factors and fraud hypotheses than interacting teams. Nominal teams also generate higher-quality fraud hypotheses. We provide evidence that social loafing by less experienced auditors in interacting teams drives the differences between nominal and interacting teams in the fraud hypothesis generation task. In addition, less experienced auditors have less developed mental simulations for frauds in interacting teams compared to those in nominal teams. A key contribution of our study is that it identifies the underlying mechanisms of the differential fraud brainstorming outcomes between nominal and interacting teams.

In an environment where three-person groups develop a creative solution to an important problem, we examine whether the efficacy of either individual- or group-based creativity-contingent incentives depends on whether they take the piece-rate or tournament form. We predict and find that group (intergroup) tournament pay increases group cohesion and collaborative efforts, which ultimately lead to a more creative group solution, relative to group piece-rate pay. While individual (intragroup) tournament pay increases individual efforts, we find that it does not enhance the creativity of group solutions relative to individual piece-rate pay. Our results advance the burgeoning management accounting literature on creativity-contingent incentives by demonstrating that reward systems are more likely to promote group creativity through collaborative efforts rather than independent individual efforts. We also provide important insights into when and why tournament pay can boost group creativity in organizations. In doing so, we contribute to a better understanding of observations from practice suggesting that organizations valuing creativity often induce intergroup competition. Data Availability: The experimental data are available upon request.

We investigate the effect of board gender diversity (BGD) on investment outcomes. We identify variation in BGD by compiling, for the first time, a global catalog of 83 BGD interventions implemented in 59 countries between 1999 and 2021. Using a staggered difference-in-differences research design, we document that BGD interventions improve investment outcomes. We find that treated firms reduce inefficient investment by 0.6 percent of total assets or 6.5 percent of total investment and are 4 percentage points more likely to have above-median investment efficiency. Cross-sectional tests reveal more pronounced results when BGD interventions are mandatory, are strongly enforced, and result in larger BGD increases. Event-time, stacked panel, and a wide variety of endogeneity-mitigating robustness tests corroborate. Our plausibly causal inferences have important implications for both research and practice.

Many companies administer wage policies based on tournaments or have different salaries attached to various promotion-based ranks within the company. Employees, however, do not always receive information about pay-level differences at higher ranks prior to joining the company. While some companies openly disclose prize spread information across these ranks, others keep such information secret. In this paper, we experimentally investigate whether the availability of tournament prize spread information enhances employee effort through both a selection effect and a motivation effect. We predict and find that when employees can select into tournaments of varying prize spreads (which proxies for an environment where prize spread information is available), high-ability employees are more likely than low-ability employees to select into the tournament with a larger prize spread. Thus, the availability of prize spread information produces a separation of employees based on ability. We also find that employees exert more effort when they can select into a tournament than when they are randomly assigned to one (which proxies for an environment where prize spread information is absent). We show that this result is driven by greater homogeneity in the ability of tournament contestants when the availability of tournament prize spread information provides self-selection opportunity. JEL Classifications: C91; D83; M40. Data Availability: Experimental data are available from the authors on request.

Creativity-dependent companies often implement failure disclosure programs to encourage employees to publicly disclose failures encountered in exploration activities with a focus on learning. We examine the effects of failure disclosure on employees’ exploration performance using an experiment in which participants perform a letter-search task by counting the search letters in each question (i.e., exploitation) or identifying an embedded shortcut that applies to all questions (i.e., exploration). We manipulate two factors: (1) whether participants are encouraged to disclose their failed attempts at finding the shortcut to future participants and (2) whether they are evaluated for their task-related skills. We predict and find failure disclosure increases the likelihood of shortcut identification in the presence of evaluation, and this effect is mitigated in the absence of evaluation. Because evaluation is typically present in natural work settings, our theory and results suggest failure disclosure is an effective mechanism to increase employees’ exploration performance.

This paper empirically examines the interactive effect of competition intensity and competition type on the use of customer satisfaction measures in executives' annual bonus contracts. Specifically, we predict a stronger association between competition intensity in an industry and the use of customer satisfaction measures in executives' annual bonus contracts when the competition is non-price-based than when the competition is price-based. Using hand-collected data from Standard & Poor's (S&P) 1500 firms' disclosures of the use of customer satisfaction measures in executive bonus contracts in 2006 and 2010 proxy statements, we find results consistent with our prediction. Our results are robust to alternative measures of competition type and competition intensity. We also find similar results when we use the weight on customer satisfaction measures in executive bonus contracts as the dependent variable. Our study extends the literature on the effect of competition on the design of managerial incentives by distinguishing between competition intensity and competition type, and providing the first large-sample empirical evidence on the joint effect of these two dimensions of competition on the incentive use of an important nonfinancial performance measure. Data Availability: Data used in this study are obtained from publicly available sources.