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Assessing the performance of business unit managers

Author

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  • Bouwens, J.F.M.G.

    (Tilburg University, School of Economics and Management)

  • van Lent, L.A.G.M.

    (Tilburg University, School of Economics and Management)

Abstract

Using a sample of 140 managers, we investigate the use of various performance metrics in determining the periodic assessment, bonus decisions, and career paths of business unit managers. We show that the weight on accounting return measures is associated with the authority of these managers, and we document that both disaggregated measures (expenses and revenues), and nonfinancial measures play a greater role as interdependencies between business units increase. The results suggest separate and distinct roles for different types of performance measures. Accounting return measures are used to create the proper incentives for managers with greater authority, while disaggregated and nonfinancial measures are employed in response to interdependencies.
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Suggested Citation

  • Bouwens, J.F.M.G. & van Lent, L.A.G.M., 2007. "Assessing the performance of business unit managers," Other publications TiSEM b319acf4-637b-4b50-ab08-2, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:b319acf4-637b-4b50-ab08-256ccf56711e
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    References listed on IDEAS

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    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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