Subjectivity as a critical success factor for incentives in accounting

Marcel van Rinsum, Professor of Accounting and Incentives at Rotterdam School of Management, Erasmus University (RSM) will deliver his inaugural address entitled Utilizing Incentives and Accountability: In Control in Control? on Friday 20 September 2019. During his lecture, Professor Van Rinsum will focus on what he believes to be a critical factor in accounting: subjectivity. He will argue that a good performance measurement system requires a balance between objectivity and subjectivity, and similarly, it also needs the right mix between evaluations based on outcomes and those based on accountability for processes.

Prof. Van Rinsum will argue that managers tend to over-rely on objective performance measures, which harms their judgments and decisions. Objectivity is generally deemed to be a desirable aspect of a performance measurement and evaluation system, while subjectivity has a negative connotation. But although it may lead to bias, subjectivity offers the much-needed possibility of incorporating professional judgment into managers’ evaluations. This can provide more congruent incentives, preventing fraud, manipulation, and short-termism, while stimulating better strategic decision-making. To appreciate the important role subjectivity can and should play in organisations, he recommends using the neutral label ‘discretion’ for disseminating insights from accounting research to managers and others.

During his address, Van Rinsum will illustrate the benefits of discretion and transparency, as well as the costs. He will surmise that a balance between objectivity and discretion is required, and that more transparency is definitely not always desirable. When evaluating results, processes leading to those results should be taken into consideration. Furthermore, he will discuss that holding managers fully accountable for outcomes is not always optimal, even though it is a pervasive practice. Finally, he will outline future research opportunities in discretion and accountability, explain the impact on organisations, and he will promote the use of new research methods.

The inaugural address will take place on Friday, 20 September 2019 and is open to the public. The ceremony will start at 16:00 in the Aula of the Erasmus Building on the Woudestein campus, Burgemeester Oudlaan 50 in Rotterdam. The reception will take place at 16:45 in the same building.

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Marcel van Rinsum is Professor of Accounting and Incentives at RSM, and is the Chair of the Department of Accounting and Control. In teaching and research, he focuses on performance measurement and reporting, bonus systems and evaluation judgments. His teaching activities include bachelor, master, MBA and executive courses. His studies have been published in international journals, including Accounting and Business Research, Accounting Organizations and Society, The Accounting Review, Contemporary Accounting Research, European Accounting Review; Journal of Accounting Research, Long Range Planning, and Management Accounting Research.

Watch Marcel van Rinsum share his views about company reporting in this short video on RSM Discovery.

Rotterdam School of Management, Erasmus University (RSM) is one of Europe’s top 10 business schools. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who can become a force for positive change by carrying their innovative mindset into a sustainable future. Our first-class range of bachelor, master, MBA, PhD and executive programmes encourage them to become critical, creative, caring and collaborative thinkers and doers. Study information and activities for future students, executives and alumni are also organised from the RSM office in Chengdu, China.

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