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Article
Publication date: 2 December 2022

Malik Ikramullah, Ammad Ahmed Khan Khalil, Muhammad Zahid Iqbal and Faqir Sajjad Ul Hassan

Recent performance appraisal (PA) literature suggests that alongside cognitive biases, rating distortions may stem from rater disposition and PA context. The study investigated…

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Abstract

Purpose

Recent performance appraisal (PA) literature suggests that alongside cognitive biases, rating distortions may stem from rater disposition and PA context. The study investigated the role of social value orientation (rater disposition), PA purposes and rater accountability (PA context) toward rating distortions at both performance levels, i.e. good and poor.

Design/methodology/approach

The authors designed an experimental study and elicited data from N = 110 undergraduate students about two video-taped performances of good and poor performers. In these videos, two managers conducted assessment interviews of two different employees for the job of a sales representative at an information technology organization. To ensure the validity of performance ratings, the authors invited 10 senior managers to provide benchmark ratings of the video-taped performances. While being placed in two separate groups, the study participants gave performance ratings on both the video-taped performances. The authors used repeated-measures analysis to analyze data.

Findings

The results revealed that rating distortions took place not because of rater social value orientation, but the PA context. Different rating distortion patterns emerged for different levels of ratees' performance.

Originality/value

This study’s findings furnish new insights for assessing rating distortions for poor as well as good performers. Moreover, the results support previous findings that for good performers, accountable raters are tempted toward accurate ratings and refrained from deflation. Similarly, for poor performers, accountable raters do not inflate ratings. The findings will open research avenues to examine the role of PA purposes in rating distortions for different performance levels.

Details

Management Decision, vol. 61 no. 1
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 5 July 2024

Abiot Mindaye Tessema, Muhammad Kaleem Zahir-Ul-Hassan and Ammad Ahmed

The purpose of this study is to examine the influence of corporate governance (CG) mechanisms on earnings management (EM) within the Gulf Co-operation Council (GCC) countries. In…

193

Abstract

Purpose

The purpose of this study is to examine the influence of corporate governance (CG) mechanisms on earnings management (EM) within the Gulf Co-operation Council (GCC) countries. In addition, the impact of firm’s political connections (PCs) on EM is investigated, as well as whether it moderates the relationship between CG and EM.

Design/methodology/approach

Fixed-effects model is used on a sample of non-financial firms across the GCC countries to test the hypotheses. Moreover, a two-stage least squares method and a propensity score matching procedure are used to mitigate potential reverse causality and sample selection bias.

Findings

This study reveals that CG mechanisms such as board size and board independence are negatively associated with EM, while CEO duality is positively association with EM. In addition, this study shows that institutional ownership and blockholders do not influence EM. Furthermore, PCs are shown to play a moderating role in the relationship between CG and EM. The results of this study are robust to endogeneity testing and to alternative measures of CG.

Research limitations/implications

Because of a lack of data, the authors do not consider additional CG attributes such as tenure, education and age of board members. Future research could explore the impact of these attributes when data becomes available.

Practical implications

This study provides valuable insights for government officials, policymakers, standard-setters, regulators and corporations by presenting new evidence on the relationship among CG, PCs and EM. Moreover, this study underscores that, in the absence of a strong institutional infrastructure and investor protection, relying solely on strong CG and Islamic values and GCC culture may have a limited impact on effective monitoring of opportunistic managerial behaviors.

Originality/value

This study contributes to existing literature with a specific focus on the unique political, legal, institutional, social and cultural setting of the GCC region. Moreover, this study provides new insights that PCs serve as a governance mechanism in mitigating EM because relatively little attention has been given to the impact of PCs in improving accounting outcomes, especially in the context of the GCC region where Islamic ethical norms often shape business practices.

Details

International Journal of Ethics and Systems, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2514-9369

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