The Influence of Geographical Distance on the Subjective Performance Measurement of Managerial Behavior


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Abstract

Accounting research provides theory and evidence on the choice and use of subjective performance measures, in which these measurements can be made by persons who are either internal to a firm (e.g., peer performance appraisal reports) or external to a firm (e.g., a firm's customers measure their satisfaction with the firm's products).We extend the accounting research by hypothesizing and presenting archival evidence that accessible objective and external and internal subjective performance measures about a branch manager's performance interact with the geographical distance between the branch and home offices to affect the home-office manager's subjective performance measurement of a branch manager's “integration” behavior. We predict and find that the influence of objective and internal subjective performance measures on a subjective performance measurement increases with geographical distance, but the influence of an external subjective performance measure on the subjective performance measurement decreases with geographical distance. An important contribution of this study is to provide analysis and evidence that the effects of accessible performance measures can be due not only to their information content but also due to their effects on a performance variable that is subjectively measured because they are cognitively accessible to the measurer. The effects of accessible performance measures also depend on the type of measure.
 
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Paolo Perego
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