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Differential Weighting of Objective Versus Subjective Measures in Performance Evaluation: Experimental Evidence

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  • Narisa Tianjing Dai
  • Xi (Jason) Kuang
  • Guliang Tang

Abstract

In this paper, we conduct two experiments to investigate how managers’ differential weighting of objective versus subjective measures affects their performance-evaluation decisions. Drawing on psychological theory, we predict that managers heuristically perceive objective measures to be more scientific than subjective measures. As a result, their performance-evaluation decisions are influenced more by objective measures than by subjective measures. Experimental results are consistent with our prediction. Supplemental analyses further support our theory by showing that participants do not perceive objective measures to be more important for performance evaluation nor do they perceive subjective measurement to be inappropriate. The implications of our findings for management accounting research and practice are discussed.

Suggested Citation

  • Narisa Tianjing Dai & Xi (Jason) Kuang & Guliang Tang, 2018. "Differential Weighting of Objective Versus Subjective Measures in Performance Evaluation: Experimental Evidence," European Accounting Review, Taylor & Francis Journals, vol. 27(1), pages 129-148, January.
    • Handle: RePEc:taf:euract:v:27:y:2018:i:1:p:129-148
    DOI: 10.1080/09638180.2016.1234402
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    Cited by:

    1. van Rinsum, M., 2019. "Utilizing Incentives and Accountability: In Control in Control?," ERIM Inaugural Address Series Research in Management EIA 2019-078-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
    2. Irene Trapp & Rouven Trapp, 2019. "The psychological effects of centrality bias: an experimental analysis," Journal of Business Economics, Springer, vol. 89(2), pages 155-189, March.
    3. Au, Pak Hung & Chen, Bin R., 2019. "Objective and subjective indicators in long-term contracting," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 309-331.
    4. Kai A. Bauch & Peter Kotzian & Barbara E. Weißenberger, 2021. "Likeability in subjective performance evaluations: does it bias managers’ weighting of performance measures?," Journal of Business Economics, Springer, vol. 91(1), pages 35-59, February.
    5. Lisa-Marie Wibbeke & Maik Lachmann, 2020. "Psychology in management accounting and control research: an overview of the recent literature," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 31(3), pages 275-328, September.

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