An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Vincent K. Chong
The University of Western Australia

Ian R.C. Eggleton
The University of Waikato

Abstract: This study examines the effects of information asymmetry and organizational commitment on the relation between the extent of reliance on incentive-based compensation scheme and managerial performance. The responses of 109 managers, drawn from a cross-section of manufacturing companies, to a questionnaire survey, were analyzed by using a multiple regression technique. The results provide evidence of higher managerial performance for managers with low organizational commitment and a high reliance on incentive-based compensation scheme in high information asymmetry situations. On the other hand, the results show that the performance level of managers with high organizational commitment is unaffected regardless the degree of information asymmetry and the extent of reliance on incentive-based compensation scheme.

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