이화여자대학교

초록/요약

[Purpose]Analyzing data on target setting and performance evaluation from a securities firm in Korea, we empirically test whether target ratcheting occurs. We also examine whether such target ratcheting depends on monitoring characteristics for branches of the securities firm. [Methodology]Using 242 branch－year data of the securities company from 2015 to 2019, we perform ordinary least square regression to test the research hypotheses. [Findings]We find evidence that current year performance relative to target has significantly positive effect on increase in next year sales target. However, we fail to find that the relationship between target change and performance is higher when previous performance falls short of target. These test result implies that the target ratcheting occurs but the asymmetric pattern of target ratcheting does not occur. We present evidence that as the assets for branches grow, the relationship between target changes and performance decreases. In addition, we find evidence that the relationship between target changes and performance in branches with high status is lower than that in low status branches. Moreover, we show that the association between target changes and performance in branches changed status is lower than that in branches unchanged status. [Policy Implications]These findings provide the empirical evidence on target ratcheting and the monitoring characteristics for branches affecting target ratcheting. This study can not only provide additional empirical evidence on target ratcheting, but also present new determinants affecting target ratcheting. Therefore, the study helps practitioners to understand the determinants affecting target setting and to develop control mechanism in target setting process.