Does Mandatory Measurement and Peer Reporting Improve Performance?

51 Pages Posted: 13 Aug 2015 Last revised: 16 Mar 2017

See all articles by Susanna Gallani

Susanna Gallani

Harvard Business School

Takehisa Kajiwara

Kobe University - Graduate School of Business Administration

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems

Date Written: March 15, 2017

Abstract

We examine the effect of mandated measurement and peer disclosure of new information on the persistence of performance improvements in a setting without performance incentives. Value of information (VOI) theory posits that information can improve the accuracy of posterior beliefs and thereby have a decision facilitating effect. These effects are more pronounced when the information is new versus an update. Using data from the Japanese National Hospital Organization, we analyze performance trends following regulation requiring standardized measurement and peer disclosure of absolute and relative patient satisfaction performance. After controlling for ceiling effects and regression to the mean, mandatory patient satisfaction measurement and peer disclosure introduce positive and significant mean shifts in performance with larger improvements for poorly performing hospitals. The largest positive effects occur when the information is new. Our study provides empirical evidence of the decision facilitating value of information without confound from its decision influencing value.

Keywords: Value of information, Patient Satisfaction, Mandatory performance measurement, Health care.

JEL Classification: I10, L30, M14, M41

Suggested Citation

Gallani, Susanna and Kajiwara, Takehisa and Krishnan, Ranjani, Does Mandatory Measurement and Peer Reporting Improve Performance? (March 15, 2017). Harvard Business School Accounting & Management Unit Working Paper No. 16-018. Available at SSRN: https://ssrn.com/abstract=2642914 or http://dx.doi.org/10.2139/ssrn.2642914

Susanna Gallani (Contact Author)

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

Takehisa Kajiwara

Kobe University - Graduate School of Business Administration ( email )

2-1,Rokkodai,, Nada-ku
Kobe, 657-8501
Japan
+81-78-803-6988 (Phone)
+81-78-803-6988 (Fax)

Ranjani Krishnan

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-353-4687 (Phone)
517-432-1101 (Fax)

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