No abstract

Employee perceptions of performance appraisal processes have received considerable attention in the public management literature, but the views of supervisors who actually conduct the appraisals have received relatively little consideration. This article addresses that gap in the literature by examining supervisors’ perceptions of individual employee performance appraisal in the U.S. federal service in an attempt to identify structural and operational problems associated with that system as viewed by those responsible for making it work. Data are drawn from a Merit Systems Protection Board (MSPB), Merit Principles Survey, which contained a section asking supervisors to evaluate nine potential problems associated with performance appraisal. Responses indicated that inflated ratings, flawed standards, and a lack of support were the most problematic aspects of the appraisal process. An agency’s use of performance-based rewards, a supervisor’s belief that his or her own performance is assessed objectively, and supervisor age are consistent predictors of supervisors’ perceptions.

Purpose This study aims to examine the consequences when audit committees have different economic incentives (i.e. incentive-based compensation) to switch auditors. Design/methodology/approach The author focuses on companies experiencing an auditor switching event (client-initiated dismissals) and uses Heckman’s (1997) two-stage estimation procedure to control endogenous bias. Audit committee quality is measured by the level of incentive-based compensation. Accrual quality and abnormal audit fees are examined over the periods of auditor switches. Findings Using 1,087 US companies between 2006 and 2014, the author found that audit committees’ incentive-based compensation is negatively (positively) associated with accruals quality (abnormal audit fees) only when companies switch from Big 4 to non-Big 4 auditors or switch within non-Big 4 auditors. For companies that switch from non-Big 4 to Big 4 auditors, she found no evidence. Research limitations/implications This study provides a detailed discussion of the consequences of audit committee quality. The findings also contribute to the literature by concluding that economic incentives are associated with ineffective oversight, particularly after auditor switches. Practical implications Sarbanes–Oxley Act and its associated regulations significantly expanded the oversight role of audit committees. However, regulators bypassed restrictions on audit committee compensation. Accordingly, the author suggests that regulators focus on the issue of economic incentives to improve audit committee quality. Originality/value Minimal research has been conducted on the role of audit committees when companies switch to a new external auditor. The author shows that when companies switch auditors, incentive-based compensation significantly affects the monitoring quality of audit committees.

Manuscript Type EmpiricalResearch Question/Issue This study tests whether the adoption of clawback provisions mitigates overinvestment. A clawback provision is a recoupment policy that allows certain bonuses previously paid to executives to be cancelled or "clawed back" if financial statements are restated.Research Findings/Insights This study focuses on 1,093 voluntary clawback adopters in the United States during 2006-2012 and uses propensity score matching to obtain a matched sample. We then perform a difference-in-differences analysis to assess pre-and post-adoption changes in overinvestment. The empirical results show that (i) clawback provisions mitigate overinvestment, and (ii) overinvestment decreases most for those executives identified as overconfident or receiving higher option compensation.Theoretical/Academic Implications Agency conflict between shareholders and executives distorts a firm's investment decisions. According to the agency-based explanation, better financial reporting quality decreases information asymmetry. Clawback provisions improve financial reporting and mitigate potential overinvestment under agency conflict. To the best of our knowledge, no other published study has discussed executives' investment behavior or has reported that one benefit of clawback provisions is mitigating ex post overinvestment. It is important for regulators and academics to understand how clawback provisions impact executives' behavior.Practitioner/Policy Implications The results of this study provide political implications for mandatory clawback provisions under Section 954 of the Dodd-Frank Act after 2016 in the US.Given that we show that voluntarily adopting clawback provisions curbs overinvestment, it is important to examine whether this new act should place restrictions on the form of executive pay.

Research and development (R&D) investment affects firms' growth and reflects their investment energy. However, it is recorded as an expense in financial statements, according to generally accepted accounting principles (e.g., International Financial Statements Standards). This study examines whether firms' R&D investment has a positive effect on their performance, when they engage in corporate social responsibility. The author focuses on firms that have earned corporate social responsibility awards from Global Views Magazine, Common Wealth Magazine, and the Taiwan Institute for Sustainable Energy in order to measure firms' levels of corporate social responsibility engagement. Tobin's Q is used as a proxy for firm performance. Because corporate social responsibility engagement is not mandatory in Taiwan, the Heckman two-stage process is used to control for an endogeneity bias. In the first stage, logit regression is employed, using a dummy variable as a proxy for a firm's social responsibility engagement. In the second stage, the impact of corporate social responsibility on firm value is estimated by regressing Tobin's Q on various governance and firm characteristics and on a dummy variable for social responsibility engagement. Based on all public traded companies in Taiwan for the period 2005 -2014, and after controlling for an endogeneity bias, it is found that R&D investment is positively associated with Tobin's Q, but only when firms engage in corporate social responsibility. Therefore, an investment strategy that meets corporate social responsibility objectives benefits firm performance. The empirical results provide policy implications for firm R&D investment and corporate social responsibility implementation.