Veranstaltungsprogramm der VHB Jahrestagung

Prior literature indicates that using management control (MC) practices in a consistent manner driven by the firm’s headquarters (HQ) could be beneficial for strategy implementation. We further argue that a HQ-consistent use of MC practices could facilitate organizational identification processes at the individual level and, thereby, could increase individual satisfaction. However, if the preferences for MC design rooted in national cultural backgrounds largely diverge from the HQ, we argue that this positive relationship could be mitigated. Finally, we predict that a stronger perception of the firm’s beliefs system can counteract the mitigating influence of national cultural distance on the relationship between a HQ-consistent use of MC practices and individual satisfaction. Based on a large survey in a multinational firm, we find that a HQ-consistent use of MC practices is positively associated with individual satisfaction. However, we also find that national cultural distance negatively moderates this relationship. To counteract this negative moderating influence of national cultural distance, we find that a stronger perception of the firm’s beliefs system can function as an important complement. Altogether, our study has implications for the design of MC in multinational settings.

This paper provides initial survey evidence on performance measures which German private companies use for executive compensation (N = 142). 68% of the companies employ one performance measure only, 17% use two measures. However, the median company uses four measures for steering the company. 77% and 76% of respondents consider EBIT/EBITDA and net income, respectively, to be the most important performance measures for executive compensation, while Economic Value Added© (6%) and ROCE (3%) play a minor role. 13% of the companies pay bonuses based on non-financial measures, mostly customer and/or employee satisfaction, rarely environmental or diversity measures.

Multivariate regression analyses yield three main results. First, EBITDA is more likely to be employed for bonus compensation with larger companies and when executives hold a company share of more than 25%. With unconsolidated financial accounts, the use of EBITDA allows to reward executives for good company performance without weakening tax-saving incentives. Second, companies with a larger number of owners are more likely to employ non-financial performance measures for bonus compensation. Less informed shareholders may want executives to respond timely to warning signals such as deteriorating employee or customer satisfaction. Third, companies with at least one female on the executive board employ more financial performance measures for steering the company than companies with male executives only. This result matches related findings from publicly listed companies suggesting that female executives are associated with improved internal control quality and increased financial reporting quality.