This study examines whether the potential for hold-up in supply chains influences the extent of process integration and information sharing between partners. The analysis uses performance scorecards and financial performance data collected from a major manufacturer regarding its contractual arrangements with 156 distributors. I find that distributors engage in less extensive process integration and information sharing with the manufacturer as the potential for hold-up increases, measured by the asymmetry of interdependence between partners. I also find that distributors engage in more extensive process integration and information sharing as the potential for hold-up decreases, measured by the magnitude of interdependence between partners. Additional evidence shows that more extensive process integration and information sharing have favorable financial performance implications for supply chain partners and enhance the likelihood of distributor contract renewal. Overall, the results indicate that the potential for hold-up can restrict the performance benefits available to partners from developing more extensive supply chain integration practices. Data Availability: A confidentiality agreement restricts data availability. Some data have been modified by a common factor to preserve research site confidentiality.

Motivated by recent changes to corporate governance standards around the world, we use a regulatory shock that substantially altered the governance structure for some firms to shed light on the long-term impact of mandates that are of global interest. Firms affected by this shock had lower values and non-mandated governance practices that were less shareholder friendly before the mandates were in effect when compared to unaffected matched peers. In the post-mandate period, we document a 48% tightening of the relative value gap, and show that this gap relates to the continued use of less shareholder friendly non-mandated governance practices. Our results suggest that governance mandates can tighten, but not eliminate, the value gap between poorly and well governed firms, and that firms affected by the shock continue to have less shareholder friendly governance cultures long after regulatory intervention.

Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation Raffi J. Indjejikian, Michal Matějka, Jason D. Schloetzer; Target Ratcheting and Incentives: Theory, Evidence, and New Opportunities. The Accounting Review 1 July 2014; 89 (4): 1259–1267. https://doi.org/10.2308/accr-50745 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search

Prior CEO turnover literature characterizes the board's decision as a choice between retaining versus replacing the CEO. We focus instead on the CEO's decision rights and introduce a third option in which the incumbent CEO is removed but retained on the board for an extended period, which we call Retention Light. Firms may benefit from Retention Light because former CEOs possess unique monitoring and advising abilities, but the former CEO could also exploit available decision rights for personal benefit. A Retention Light CEO's decision rights generally exceed those of CEOs who exit the firm entirely but fall short of the rights of a retained CEO. We find that when prior firm performance is better, the former CEO is more likely to be retained on the board (Retention Light) than to exit the firm. However, this relation is weaker when the CEO reaches normal retirement age at which time CEO power becomes more important. We also provide evidence on how the nature of the CEO's bargaining power varies with his personal attributes and board characteristics in its influence on the Retention Light decision. Retention Light firms are more likely than CEO‐exit firms to select a successor CEO with relatively weaker bargaining power. Finally, Retention Light involving a nonfounder CEO is negatively associated with the firm's postturnover financial performance. Overall, Retention Light is a distinct CEO turnover option that has important consequences for board decisions and firm performance.

We conducted a clustered randomized field experiment with 20 Brazilian distributorships of a multinational direct sales organization to examine whether controlling failure perceptions through formal communications increases performance. We used the organization's weekly sales meetings to deliver a video-based message from the regional head that either communicates workers should view failure as a natural part of learning rather than an indictment of their ability (treatment condition) or simply summarizes the organization's history (control condition). We find that those who were assigned to the treatment condition were more likely to sustain their effort in response to the economic adversity that coincided with our experiment. Additional analyses suggest that our treatment accomplished this by increasing job-specific confidence and by reinforcing social norms that encourage workers to persevere after failure. Overall, our findings highlight that formal communications from senior management are a viable control mechanism for sustaining effort in the face of failure.

We find that firms are less likely to disclose information regarding a negative economic event for which the firm is likely to be blamed than a negative event for which the firm is likely to be perceived as blameless. We identify 383 material negative events (casualty accidents, oil spills, catastrophes, investor class action lawsuits) and find that firms are approximately four times less likely to disclose information following a negative blamed event than a blameless event. Consistent with disclosure of blamed events resulting in greater costs to the firm, we find that firms that disclose after a blamed, but not a blameless, event experience greater reputation and litigation costs than firms that do not disclose. We find that blame attribution provides incremental information over manager career concerns in the disclosure decision. These findings suggest that an event-specific factor—blame attribution—affects firms' propensity to provide disclosures about negative economic events. Data Availability: The list of 383 material negative economic events is available upon request.