Monitoring and the Portability of Soft Information

68 Pages Posted: 15 Mar 2013

See all articles by Dennis Campbell

Dennis Campbell

Harvard University - Accounting & Control Unit

Maria Loumioti

The University of Texas at Dallas

Date Written: March 14, 2013


We study the portability of soft information in a decentralized financial institution. Theories from a variety of literatures suggest that difficulties in capturing, storing, and communicating soft information can inhibit its portability over time and across individuals within the organization. Using unique data on lending decisions made by employees in a highly decentralized financial services organization, we show that a monitoring system which captures soft information for vertical communication (to superiors) purposes also facilitates the horizontal communication of soft information (across employees) for decision-making purposes. Contrary to prevailing views on the limited portability of soft information, our results provide evidence that the “stock” of soft information accumulated in this system has persistent effects on the lending decisions of employees. We show that employees rely on this information to increase access to credit for borrowers, provide more favorable pricing terms, and reduce the ex post risk of their lending decisions. These effects remain even when this information was acquired by employees other than the decision-maker, and they are not diminished by the physical separation of employees working in different business units.

Suggested Citation

Campbell, Dennis and Loumioti, Maria, Monitoring and the Portability of Soft Information (March 14, 2013). Harvard Business School Accounting & Management Unit Working Paper No. 13-077, Available at SSRN: or

Dennis Campbell (Contact Author)

Harvard University - Accounting & Control Unit ( email )

Soldiers Field
Boston, MA 02163
United States

Maria Loumioti

The University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

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