Karl Schuhmacher completed his PhD in Management at the University of Lausanne, Switzerland, in 2014. Prior to joining the faculty at Emory, he was a Visiting Research Scholar at the University of Pennsylvania. His primary research focus is related to management accounting, cost systems, performance measurement, and incentive contracting. His work has been published in the Journal of Accounting Research, The Accounting Review, Management Science, Contemporary Accounting Research, and Accounting and Business Research.
Education
University of Lausanne
PhD
Management
2014
University of Mannheim
Diplom-Kaufmann
Business Administration
2009
Areas of Expertise
Management Accounting
Incentive contracting
Performance Measurement
Costing
Publications
Un-Nudging Pay Gaps: The Role of Pay Raise Budget Framing
The Accounting Review
Gunnell, Schuhmacher, and Towry
2025-06-26
Pay gaps, like gender or racial gaps, violate the widely held belief that employees should receive equal pay for equal work. This study examines whether a common control choice – framing pay raise budgets in percentages – contributes to perpetuating pay gaps. We predict that when the pay raise budget is framed as a percentage (the percentage frame), it inadvertently nudges managers to anchor individual raises on that budget percentage, thereby impounding prior salaries, and thus, existing inequities, into pay raises. We further predict that framing the pay raise budget as an absolute amount (the dollar frame) can un-nudge this behavior. As expected, we find in two experiments that the dollar frame perpetuates pay gaps less than the percentage frame, and that this difference is robust to varying levels of ambiguity about the source of salary differences. Our study examines a simple, cost-effective way to limit the perpetuation of pay gaps.
Use and Design of Peer Evaluations for Bonus Allocations
Journal of Accounting Research
Grieder and Schuhmacher
2025-06-25
We conduct an experiment to investigate the use of peer evaluations for compensation purposes. Although organizations often rely on peer evaluations for incentive compensation, it is not well understood how peer feedback should be used and designed to ensure non-distorted evaluations and motivate effort provision. We study peer evaluations in form of bonus allocation proposals, thereby enabling a quantifiable test of our hypothesis. We distinguish between discretionary use (i.e., allocation by the manager) and formulaic use (i.e., allocation by the team via the average) of self-including and self-excluding proposals. We find that, relative to self-including proposals, self-excluding proposals are less distorted, irrespective of use, but lead to more effort provision only under formulaic use. Under discretionary use, the benefits of self-excluding proposals are offset, as managerial biases enter bonus allocations. In sum, our findings illustrate benefits of delegating bonus allocations to teams through formulaic use of self-excluding peer evaluations and extend the understanding of how organizations can effectively incorporate peer evaluations into incentive compensation.
Reciprocity over time: Do employees respond more to kind or unkind controls?
Contemporary Accounting Research
Samet, Schuhmacher, Towry, and Zureich
2025-04-24
Reciprocity plays a critical role in the way employees respond to managerial control decisions. The current consensus is that employees punish managers for implementing unkind controls (negative reciprocity) more than they reward managers for implementing kind controls (positive reciprocity). We challenge this consensus. Prior research focuses on settings that emphasize employees’ immediate reciprocal responses. However, in the workplace, employees often respond over long periods of time to sticky control decisions (e.g., budgets, pay, decision-rights). Focusing on these long-term settings, we predict and find that, while negative reciprocity is initially stronger than positive reciprocity, it also fades more over time than positive reciprocity. This differential fading is so pronounced in our setting that positive reciprocity is stronger overall in the long run. Thus, in long-term settings, positive responses to kind controls may play a more important role than negative responses to unkind controls. Our results inform managerial decisions about the use of kind versus unkind controls and suggest potential long-term benefits of pay disparity and other policies that treat employees differentially.
Leading by example in socially driven organizations: The effect of transparent leader compensation contracts on following
The Accounting Review
Schuhmacher, Towry, and Zureich
2022-05-01
Leading by example is one of the most powerful methods to encourage individuals to work toward a common objective. Despite the importance of leadership, little is known about how the effectiveness of leading by example depends on institutional features, such as the transparency and design of leaders' compensation contracts. We conduct two experiments to study this interplay between leadership and contracting in organizations with social missions (i.e., socially driven organizations). We find that under non-transparent contracts, leader contributions to the social objective positively influence follower contributions, reflecting effective leading by example. More importantly, under transparent contracts, the positive effect of leader contributions on follower contributions is diminished by an increase in the intensity of variable compensation and/or the amount of fixed compensation in the leader's contract. Our study informs the debate on pay transparency and demonstrates that organizations need to carefully consider the effects of contract design on leadership effectiveness.
Time is relative: How framing of time estimation affects the accuracy of cost information.
Management Science
Schuhmacher and Burkert
2021-11-30
Accurate cost information is critical to effective decision making within organizations. Cost computations often rely on subjective judgments by employees regarding the amount of time that different tasks consume. In an experimental setting, we examine the accuracy of two common approaches to eliciting subjective time estimates vital for accurate cost information. Specifically, we compare estimation error when employees estimate (i) the total time for all iterations of a task (the pool approach) versus (ii) the average time for one iteration of a task (the unit approach). These two approaches have received interest by both practitioners and researchers and are at the heart of the difference between conventional activity-based costing (ABC) and time-driven ABC. While mathematically equivalent, we hypothesize and find that the two approaches evoke different cognitive processes that lead to differences in estimation error. Relative to the unit approach, the pool approach produces larger error in the allocation of time among different tasks, but only when the number of iterations per task varies across tasks. Further, the pool approach results in overestimation of productive time, whereas the unit approach leads to underestimation of productive time. Our findings are robust to different response modes of the pool approach (estimates in absolute time units and in percentages). This study is relevant for designers and users of cost and performance-measurement systems in that allocation errors lead to cost cross-subsidization and poor resource-allocation decisions, while overall errors undermine capacity utilization decisions.
The relationship between lack of controllability and proactive work behavior: An empirical analysis of competing theoretical explanations
Accounting and Business Research
Burkert, Fischer, Hoos, and Schuhmacher
The controllability principle suggests evaluating managers solely based on performance measures they can control. In practice, however, companies often disregard this principle. Therefore, our study addresses organisational benefits linked to the lack of controllability in measures used for managers’ performance evaluations. We draw on important case-based findings to establish a positive ‘base relationship’ between lack of controllability and proactive work behaviour. We test this base relationship with a large-scale sample and find that companies encourage higher levels of proactive work behaviour when they rely on less controllable performance measures. Drawing on recent developments in role theory, we advance previous research and extend the base model by including the theoretical construct of flexible role orientation. We examine different mechanisms through which flexible role orientation potentially impacts the base model. Using survey responses from 432 managers, we find evidence for a mediation model as opposed to an interaction model. Specifically, we find that lack of controllability enhances role conflict, which in turn induces more flexible role orientations ultimately resulting in higher levels of proactive work behaviour.
Reward Allocations in Teams: When Decision Autonomy Helps and When it Hurts
Schuhmacher and Wiernsperger As organizations adopt flatter structures, teams increasingly decide how to allocate jointly earned rewards—such as bonuses, profits, or royalties—often with no or minimal hierarchical oversight. Prior research shows that, given certain mechanisms, team members can effectively use subjective, non-contractible peer information to allocate rewards, thereby curbing free riding and motivating effort contributions. However, it is unclear whether teams should be granted decision autonomy over the mechanisms that coordinate their use of peer information. We conduct an experiment that gives teams the choice between a mechanism that is ineffective in motivating effort – even splits (i.e., no use of peer information) – and one of two mechanisms that can motivate effort via the use of peer information: bargaining and impartial sharing. Both of these peer-based mechanisms increase effort contributions – and team profits – by about 50% relative to even splits. Yet, when granted a choice, most teams opt for even splits due to naïve expectations and preferences for procedural clarity. Further, the results suggest that teams prefer bargaining over impartial sharing, since bargaining preserves individual agency and control compared to impartial sharing. Our study reveals a key tension when delegating decision autonomy to teams: while granting autonomy over the subjective use of peer information is beneficial given specific allocation mechanisms, granting autonomy over the very choice of allocation mechanism may backfire.
Aggregation Fallacy: An Explanation for Systematic Forecast Bias
Schuhmacher, Zureich, and Burkert In forecasting and capital budgeting, managers tend to underestimate costs. Prior research typically attributes this forecast bias to misaligned incentives or imperfect information. We introduce a novel explanation: aggregation fallacy. The key idea is that individuals provide forecasts of aggregate outcomes (e.g., total costs) by erroneously adding component forecasts (e.g., costs in divisions A and B). While such linear aggregation is appropriate for deterministic information (i.e., costs that have been incurred), it can result in systematic bias with probabilistic information (i.e., future costs) due to right skew in cost distributions. In support of our hypotheses, results of several experiments show that aggregation fallacy leads to systematic underestimation of costs. Additional analyses demonstrate that aggregation fallacy is not eliminated by learning and also holds with financial incentives for forecast accuracy. Overall, our study shows that, even with aligned incentives and perfect information, systematic cost underestimation may arise due to aggregation fallacy.
Managers’ performance measures and their work behavior
Management accounting literature devotes considerable attention to the “controllability principle.” This principle stipulates that managers should only be held responsible for the results they directly control through their actions. The literature argues that the use of less controllable performance measures reduces managerial motivation and causes stress. However, Karl Schuhmacher, assistant professor of accounting; Michael Burkert (U Fribourg); Franz Fischer (independent researcher); and Florian Hoos (HC Paris) argue that there can also be positive effects associated with a lack of controllability. The researchers conducted a survey with 432 business managers, asking questions related to the measures used for their performance evaluations. They concluded that less controllable measures do create stress but also induce proactive work behaviors. In fact, the lack of controllability stimulates managers to cope with stress by interpreting their roles more flexibly and cooperating with peers to seek solutions for organizational problems they cannot control individually. The authors suggest further research to determine how organizations modulate between the positive and negative effects of disregarding the controllability principle.
Source:
In the News
Using percentages to manage raises may perpetuate gender pay gaps
yahoo!finance online
Budgets for pay raises are typically framed as percentages of existing salaries, but when the existing salaries are already unequal, ...
Why shrinking the pay gap is a question of dollars, not percentages.
emorybusiness.com online
The gender wage gap shows no sign of improving any time soon. If anything, evidence suggests it’s growing in the United States. Recent stats show that for every dollar earned by men, women in the same job earn just 92 cents—that equates to one month of salary less in a given year. ...
How modern managerial accounting practices help companies grow
emorybusiness.com
Measuring performance for strategy execution. Managerial accounting competencies, such as performing high-level analyses on business strategy, can expose external threats to strategy execution. Once a company establishes a strategy or objective, management accountants can design systems so that actions lead towards achieving the goal of that strategy or objective, such as through performance management. “We want to make sure the employees work in the best interest of the organization and that we’re all pulling on one string,” Karl Schuhmacher, assistant professor of accounting at Goizueta, said. “The key with measuring different aspects of performance in an organization is determining what is the underlying thing that we care about and then we can constantly test how well our metric measures that,” Towry said. “We can think of the metric as a shadow or reflection of the underlying dimension of performance we are interested in.”
Goizueta welcomes new faculty including (from left to right) Vilma Todri, assistant professor of information systems & operations management; Rohan Ganduri, assistant professor of finance; Jesse Bockstedt, associate professor of information systems & operations management; Cassandra Estep, assistant professor of accounting; Karl Schuhmacher, assistant professor of accounting; Inyoung Chae, assistant professor of marketing; Demetrius Lewis, assistant professor of organization & management; Morgan Ward, assistant professor of marketing; and Tian Heong Chan, assistant professor of information systems & operations management. John Kim, not pictured, is a lecturer in organization & management.
“We are thrilled about these additions to our team,” says Kristy Towry, vice dean for faculty & research, Goizueta Term Chair in Accounting, and professor of accounting. “They are all innovators in their fields, and I can’t wait to see what new knowledge they’ll bring to the table here at Goizueta.”
