Information, Incentives, and Attention: A Field Experiment on the Interaction of Management Controls

58 Pages Posted: 10 Mar 2023

See all articles by Kathrin Manthei

Kathrin Manthei

Rheinische Fachhochschule Köln

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences; IZA Institute of Labor Economics

Timo Vogelsang

Frankfurt School of Finance & Management

Date Written: June 1, 2022

Abstract

We study the profit effects and interplay of two core accounting practices in a field experiment in a large retail chain. In a 2 × 2 factorial design, we vary (i) whether store managers obtain decision-facilitating information on a profit metric and (ii) whether they receive performance pay based on the same metric. We find that both practices increase profits significantly. In contrast to reasoning based on standard economic theory, we do not find complementarity between both interventions. Rather, we detect evidence in line with an attention-directing role of both practices: the introduction of each raises attention to the underlying objective, which induces a countervailing substitution effect.

Keywords: management controls, performance pay, decision-facilitating, decision-influencing, accounting information, field experiment, complementarity, attention direction

JEL Classification: J33, M52, C93

Suggested Citation

Manthei, Kathrin and Sliwka, Dirk and Vogelsang, Timo, Information, Incentives, and Attention: A Field Experiment on the Interaction of Management Controls (June 1, 2022). Available at SSRN: https://ssrn.com/abstract=4381267 or http://dx.doi.org/10.2139/ssrn.4381267

Kathrin Manthei

Rheinische Fachhochschule Köln ( email )

Schavenstr. 1a-b
Köln, Nordrhein-Westfalen 56776
Germany

Dirk Sliwka

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Timo Vogelsang (Contact Author)

Frankfurt School of Finance & Management ( email )

Sonnemannstraße 9-11
Frankfurt
Germany

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