State Ownership and Target Setting: Evidence from Publicly Listed Companies in China*
研究中国国企如何设定和调整财务目标以平衡经济与社会目标，发现国企财务目标更易达成且更少向上调整，从而减少管理者操纵行为，对理解多目标组织中的目标设定实践有贡献。
ABSTRACT Prior research has examined target setting in market‐driven companies but has not examined target setting in state‐run companies that also have social and political objectives. I examine how Chinese state‐owned enterprises (SOEs) set and revise performance targets to motivate a balanced effort allocation. Using data on financial performance (sales) targets set by SOEs and non‐SOEs during the period 2006–2016, I predict and find that the financial targets of SOEs are easier to achieve than those of non‐SOEs, and that SOEs with easier financial targets perform better regarding corporate social responsibility. I also predict and find that SOEs ratchet financial targets upward less than non‐SOEs to keep them easy to achieve and, as a consequence, SOE managers are less likely to game performance to avoid future target increases. The results are robust to alternative measures of state influence and alternative measures of financial targets. These findings suggest that firms balance their multiple objectives through strategically setting and revising financial targets. In doing so, this study provides a better understanding of target‐setting practices in organizations pursuing multiple, sometimes conflicting, objectives.