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Target ratcheting

Van der Stede, Wim (2015) Target ratcheting. LSE Accounting, 6. p. 17.

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Abstract

Here is one diehard maxim of business: don't overshoot your budget target because next thing you know your target for next year will be tougher yet. Target ratcheting at work; that is, when you do better than target, your next target is even higher, but when you do worse, your target won’t be reduced. So why shoot yourself in the foot? Add to this the common belief in budgeting settings that either you spend it or lose it, and thus arises the motivation to not only "not overshoot" but "spend more" to boot. A double whammy: leave money unearned and spend more than is necessary.

Item Type: Article
Additional Information: © 2015 The Author
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Sets: Departments > Accounting
Date Deposited: 02 Mar 2016 15:25
Last Modified: 15 Dec 2019 00:14
URI: http://eprints.lse.ac.uk/id/eprint/65586

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