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Assessing the Performance of Business Unit Managers

Author

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  • Bouwens, J.F.M.G.

    (Tilburg University, Center For Economic Research)

  • van Lent, L.A.G.M.

    (Tilburg University, Center For Economic Research)

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 non-financial 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 non-financial measures are employed in response to interdependencies.
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Suggested Citation

  • Bouwens, J.F.M.G. & van Lent, L.A.G.M., 2006. "Assessing the Performance of Business Unit Managers," Discussion Paper 2006-92, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:f83d0732-69e7-4b1c-87c2-f2af9463d9a9
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    More about this item

    Keywords

    performance measures; business units; managerial performance;
    All these keywords.

    JEL classification:

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

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