Competition, efficiency and cost allocation in government agencies: evidence on the Federal Reserve System

Article Abstract:

A study was conducted to gauge the response of the Federal Reserve System (Fed) on the enactment of the Monetary Control Act of 1980. Other objectives of the study were to assess whether the launching of external rivalry and fee-for-service prerequisites enabled the Fed to improve efficiency and Fed managers to change cost allocation techniques for shifting of expenses to less competitive services. Results indicate that the Fed did improve its efficiency and that its managers re-directed some indirect costs from competitive priced services and markets to non-priced services and from check clearing to less competitive priced services. The findings extend previous research on the link between regulation and accounting choice and on the significance of external competition to governmental efficiency and accounting system design and use.

Public Finance Activities, Federal Reserve System, Public Administration & Finance, Accounting and auditing, United States. Federal Reserve Board, Public administration, Government productivity

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Discussion of aggregate performance measures in business unit manager compensation: the role of intrafirm interdependencies

Article Abstract:

Bushman, Indjejikian and Smith (1995) investigated how an organization's compensation practices are affected by the performance of business units above the level of a manager's unit (aggregate performance) in relation to the performance of business units under the direct supervision of the manager (own performance). They hypothesized that there is a direct relationship between the informativeness of aggregate performance measures, particularly measures of intrafirm interdependencies, and the extent to which these measures determine the manager's contingent compensation. Their findings indicate that systematic forces influence the design of compensation plans. The Bush, Indjejikian and Smith study sheds light on the difficulties encountered by researchers investigating this issue. Some of these problems are discussed.

Research, Performance, Measurement, Employee performance appraisals, Performance appraisals, Intergroup relations

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Executive compensation contract adoption in the electric utility industry

Article Abstract:

Executive compensation contracts change depending on external factors or internal company planning. In the electric utility industry, adoption of compensation contracts is a function of the combination between incentive regulation changes and production efficiency standards. Thus, utilities under increasing regulation and with low production efficiency levels are inclined to use performance-based compensation contracts. However, ventures into unregulated industries show no relation to compensation contract adoption. Time-series regression analysis also indicates that no link can be established between cash compensation and measures of electric performance and production efficiency. This negates an earlier study that executive compensation is positively related to performance.

Management, Economic aspects, Electric utilities

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