Influence Activities and Favoritism in Subjective Performance Evaluation: Evidence from Chinese State-owned Enterprises

Accounting Review, Vol. 87, No. 5, September 2012

53 Pages Posted: 7 Aug 2009 Last revised: 16 Jan 2013

See all articles by Fei Du

Fei Du

University of Illinois at Urbana-Champaign - Department of Accountancy

Guliang Tang

University of International Business and Economics

S. Mark Young

University of Southern California - Leventhal School of Accounting

Date Written: February 14, 2012

Abstract

This study addresses the two-way process in which a subordinate and a superior engage in influence activities (bottom-up) and favoritism (top-down) in subjective performance evaluation. The research context is the Chinese government’s evaluation of Chinese state-owned enterprises (SOEs) by the State-owned Assets Supervision and Administration Commission of China (SASAC). We analyze archival records of the government’s evaluation scores, score adjustments, and evaluation ratings given to 63 SOEs between 2005 and 2007. These analyses are also interpreted based on insights gained from in-depth field interviews with SASAC officials and CFOs of SOEs. Results indicate that the political connection of SOE CFOs, the geographic proximity of SOE headquarters to the SASAC central office, and political rank of the firm affects the SASAC’s evaluations.

Keywords: Subjective Performance Evaluation, favoritism, influence activities, political connections, geographic proximity, State-owned Asset Supervision and Administration Council (SASAC), Chinese state-owned enterprises (SOEs)

JEL Classification: M41

Suggested Citation

Du, Fei and Tang, Guliang and Young, S. Mark, Influence Activities and Favoritism in Subjective Performance Evaluation: Evidence from Chinese State-owned Enterprises (February 14, 2012). Accounting Review, Vol. 87, No. 5, September 2012, Available at SSRN: https://ssrn.com/abstract=1445333 or http://dx.doi.org/10.2139/ssrn.1445333

Fei Du (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Guliang Tang

University of International Business and Economics ( email )

No. 10, Huixin Dongjie, Chaoyang District
Beijing, 100029
China

S. Mark Young

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States
213-740-4848 (Phone)
213-747-2815 (Fax)

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