S-Space College of Business Administration/Business School (경영대학/대학원) Dept. of Business Administration (경영학과) Theses (Master's Degree_경영학과)
Relative Target Setting : Performance-dependent Asymmetry and Real Driving Power
상대적 목표설정의 비대칭성과 근본적 동인
- Jung, Sun Moon
- 경영대학 경영학과
- Issue Date
- 서울대학교 대학원
- 학위논문 (석사)-- 서울대학교 대학원 : 경영대학 경영학과, 2018. 2. 신재용.
- Firms use various sources of information in target setting. Since target setting functions as a management control mechanism, differences in firm environments should cause cross-sectional variation in firm’s target setting practices. While peer information is a primary source of valuable information, we still do not know the detailed landscape of how it is used in relative target setting(RTS). I conjecture that the use of peer information shows asymmetry, depending on relative performance. Upon empirical investigation, I find evidence supporting the performance-dependent asymmetry in RTS. Outperforming firms more actively exploit the peer information in target setting than poor performing firms. Next, I investigate a traditional assumption in target setting literature – the optimal contracting assumption. I examine determinants of serial correlation in target deviation, and find evidence inconsistent with optimal contracting view. That is, positive association between RTS and serial correlation is mediated by greater CEO power and financial distress, but not by manager ability, indicating separating contracts hypothesis needs re-examination.