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Manager preferences, goal setting and firm performance: Insights from a randomized field experiment
Last registered on December 08, 2017

Pre-Trial

Trial Information
General Information
Title
Manager preferences, goal setting and firm performance: Insights from a randomized field experiment
RCT ID
AEARCTR-0002599
Initial registration date
November 24, 2017
Last updated
December 08, 2017 11:04 AM EST
Location(s)
Region
Primary Investigator
Affiliation
Middlesex University
Other Primary Investigator(s)
PI Affiliation
Middlesex University
PI Affiliation
Foreign Trade University
Additional Trial Information
Status
In development
Start date
2018-01-08
End date
2019-12-12
Secondary IDs
Abstract
An emerging strand of literature suggests that managers matter. Bertrand and Schoar (2003) focus on managerial fixed effects in driving corporate policies. Other studies explore the link between managerial overconfidence and firm behavior (Malmendier and Tate, 2005, 2008); and between CEO’s characteristics in private equity firms with outcome success (Kaplan, Klebanov, and Sorensen, 2010). Along this line, we aim to explore the two following related questions. The first question focuses on the link between manager’s preferences i.e., risk and time preferences and firm’s performance. Specifically, we want to know whether the manager’s tendency to deviate from rationality i.e., manager’s behavioral problems due to loss aversion and present bias have a negative impact on firm’s performance. Our second question examines whether providing managers with simple intervention to address their behavioral problems would improve firm’s performance.
External Link(s)
Registration Citation
Citation
Kim, Trang, Nguyen Quang and Ericka Rascon. 2017. "Manager preferences, goal setting and firm performance: Insights from a randomized field experiment." AEA RCT Registry. December 08. https://doi.org/10.1257/rct.2599-2.0.
Former Citation
Kim, Trang et al. 2017. "Manager preferences, goal setting and firm performance: Insights from a randomized field experiment." AEA RCT Registry. December 08. http://www.socialscienceregistry.org/trials/2599/history/23795.
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Experimental Details
Interventions
Intervention(s)
In this project we explore key insights from behavioral economics: Prospect theory, and present bias preference; and we focus on their role in driving firm performance. We conduct the project in two stages as follows. In the first stage, we use a survey-based approach to have baseline information on the manager’s risk and time preferences, firm’s financial planning practice, and firm performance. In the second stage, we conduct a randomized field experiment i.e., RCT to explore whether providing manager with behaviors targeted solutions – using goal setting -improves firm performance.
Intervention Start Date
2018-05-01
Intervention End Date
2019-02-12
Primary Outcomes
Primary Outcomes (end points)
Improvement in performance among small firms in emerging economies.
Primary Outcomes (explanation)
Incorporating behavioural insights, our project aims to provide cost- effective interventions to aid the growth of small firms in emerging economies. In addition, the intervention is easy to scale up.
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
In this project we explore key insights from behavioral economics: Prospect theory, and present bias preference; and we focus on their role in driving firm performance. We conduct the project in two stages as follows. In the first stage, we use a survey-based approach to have baseline information on the manager’s risk and time preferences, firm’s financial planning practice, and firm performance. In the second stage, we conduct a randomized field experiment i.e., RCT to explore whether providing manager with behaviors targeted solutions – using goal setting -improves firm performance.
Experimental Design Details
Randomization Method
We implement the randomization using Stata software.
Randomization Unit
Economic regions.
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
8 economic regions.
Sample size: planned number of observations
900 small firms in garment and textile industries.
Sample size (or number of clusters) by treatment arms
• TG0 (300 firms): Control group: firms don’t receive any treatment

• TG1 (300 firms): Our research team conducts monthly surveys about firm’s
sale levels in the last month. The survey has a salient effect on reminding firms
i.e., giving feedback on their performance.

• TG2 (300 firms): Similar to TG1, plus managers are asked to set monthly sales
target. Our research team also conducts monthly surveys about firm’s sale
levels in the last month. Our treatment will use narrow-bracketing goal i.e.,
monthly target of sales to address manager’s present bias and loss aversion.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports, Papers & Other Materials
Relevant Paper(s)
REPORTS & OTHER MATERIALS