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Karen Sedatole - Emory University, Goizueta Business School. Atlanta, GA, US

Karen Sedatole Karen Sedatole

Asa Griggs Candler Professor of Accounting | Emory University, Goizueta Business School







When to Use Monetary Incentives to Motivate Employees (shortened webinar) Interim Dean Karen Sedatole on Whether Money is the Best Motivator for Employees, NewsPoint360 Emory Executive Education Faculty Profile: Karen Sedatole




A three-time recipient of the American Accounting Association’s Notable Contributions to Management Accounting Research Award and a winner of the 2020 Management Accounting Research David Solomons Prize, Sedatole brings a synthesis of business acumen and academic expertise to her role as Asa Griggs Candler Professor of Accounting. She previously served as the Interim John H. Harland Dean of Goizueta Business School from May 2020 through June 2022.

Karen’s pioneering research into the field of performance measurement and reward systems, the role of forecasting and budgetary systems within organizations, and control in interorganizational collaborations have added enormous value across academic and business spheres. In her research, she places emphasis on the role of trust, positive motivation, and systems thinking in the workplace. In tackling these issues, she has partnered across industries – health care, tech, automotive, and more – generating business-relevant research and earning her the Impact on Management Accounting Practice Award twice. Karen’s research has merited grants from the PwC Charitable Foundation, the American Institute of Certified Public Accountants, the Institute of Internal Auditors Research Foundation, the Chartered Institute of Management Accountants, and the Institute of Management Accountants. She has also demonstrated her commitment to Goizueta’s core value of principled leadership, serving as Faculty Director for Emory Executive Education’s Executive Women’s Leadership Forum.

Prior to joining the Emory faculty in 2017, Karen was the Russell E. Palmer Endowed Professor of Accounting at Michigan State University. She has also held academic appointments at the University of Texas at Austin and the Stephen F. Austin State University.

She has presented her research at numerous national and international conferences. Her effective forecasting and performance measurement articles have been published in a number of leading journals, including The Journal of Accounting Research, The Accounting Review, and the Harvard Business Review. Karen previously served as senior editor of the Journal of Management Accounting Research.

Karen holds a PhD in business administration from the University of Michigan, a masters of business administration from the University of Texas at Austin, and a bachelor of science in engineering from Baylor University.

Education (3)

University of Michigan: PhD, Business Administration 2000

University of Texas at Austin: MBA, Business Administration 1989

Baylor University: BS, Engineering 1987

Areas of Expertise (8)

Executive Compensation

Performance Evaluation

Reward Systems

Performance Measures

Interorganizational Collaboration


Compensation and Rewards

Calibration Committees

Publications (26)

Making the most of supplier industry competition through incentive contracting

2021 Journal of Accounting and Economics 71 (2-3).

Carter, M. E., J. Choi, and K. L. Sedatole

We examine how supplier industry competition affects CEO incentive intensity in procuring firms. Using Bureau of Economic Analysis data to compute a weighted supplier industry competition measure, we predict and find that higher supplier competition is associated with stronger CEO pay-for-performance incentive intensity. This effect is incremental to that of the firm's own industry competition previously documented and is robust to alternative measures of supplier competition and to exogenous shocks to competition. Importantly, we show that performance risk and product margin act as mediating variables in the relation between supplier competition and CEO incentive intensity providing support for the theory underpinning our finding. We document that CEO compensation contracts are used as a mechanism to exploit the market dynamics of upstream industries to a firm's benefit. Our findings are economically important as suppliers provide, on average, 45 percent of the value delivered by procuring firms to the market (BEA, 2016).

The folly of forecasting: The effects of a disaggregated demand forecasting system on forecast error, forecast positive bias, and inventory levels

2021 The Accounting Review 96 (2): 127–152

Bruggen, A., I. Grabner, and K. L. Sedatole

Periodic demand forecasts are the primary planning and coordination mechanism within organizations. Because most demand forecasts incorporate human judgment, they are subject to both unintentional error and intentional opportunistic bias. We examine whether a disaggregation of the forecast into various sources of demand reduces forecast error and bias. Using proprietary data from a manufacturing organization, we find that absolute demand forecast error declines following the implementation of a disaggregated forecast system. We also find a favorable effect of forecast disaggregation on finished goods inventory without a corresponding increase in costly production plan changes. We further document a decline in positive forecast bias, except for products whose production is limited owing to scarce production resources. This implies that disaggregation alone is not sufficient to overcome heightened incentives of self-interested sales managers to positively bias the forecast for the very products that an organization would like to avoid tying up in inventory.

When one size does not fit all: Mitigating heterogeneous compensation risk through subjective evaluations

2020 Management Accounting Research 49: 1-12

Anderson, S. W., H. Dekker, K. L. Sedatole, and E. Wiersma

Winner of the Management Accounting Research 2020 David Solomons Prize. Firms typically use a ‘one-size-fits-all’ (OSFA) compensation contract that specifies a common formulaic relation between performance and compensation (i.e., a performance bonus) for non-executive managers in similar jobs. However, a contract that is appropriate on average, may be suboptimal for individual managers if heterogeneity in the operating environment creates varying compensation risk. We use field data from a retail firm that introduced an OSFA bonus compensation plan for its store managers. The common bonus formula is based on a weighted sum of objective measures of performance and a subjective rating made by supervisors. The firm intended the supervisors’ discretionary subjective rating to evaluate performance on dimensions that are difficult to measure (e.g., store appearance). We test and find that supervisors give uniformly higher subjective ratings to managers whose objective measure of sales performance is measured with greater noise, and to managers who face higher performance target difficulty, the latter assessed both prior to (ex ante) and subsequent to (ex post) the evaluation period. These results obtain after controlling for manager ability and performance, and for alternative mechanisms to mitigate differences in compensation risk (e.g., salary changes, sales target changes, and bonus adjustments). The evidence suggests that supervisors use discretion in subjective ratings to provide manager-specific risk premiums for non-executive managers who are subject to an OSFA contract.

The role of calibration committees in subjective performance evaluation systems

2019 Management Science 65 (4): 1562-1585

Demere, W., Sedatole, K. L. and A. Woods

Winner of the 2020 AAA Notable Contributions to Management Accounting Literature Award. Featured in Harvard Business Review, November-December 2018. We provide the first empirical evidence of the role that calibration committees play in subjective performance evaluation systems. Using proprietary data from a large multinational organization, we begin by showing that calibration committees adjust ratings sparingly (i.e., 25% adjustment rate), but when they do, downward adjustments are significantly more frequent and of greater magnitude than upward adjustments. Calibration committees tend to downward (upward) adjust ratings of supervisors who give higher (lower) than average initial ratings. Taken together, calibration committees improve the consistency of ratings across supervisors and mitigate leniency bias, but exacerbate centrality bias. We also show that calibration committees facilitate the appropriate allocation of decision rights by deferring rating decisions to supervisors who possess a relatively greater information advantage. That is, calibration committees are less likely to adjust the rating of a subordinate who is further removed from committee members in the organizational hierarchy. Finally, we show that calibration committees promote supervisor learning about organizational performance rating expectations through calibration adjustments. This study contributes to the literature on performance evaluation by providing new insights regarding the organizational dynamics of subjective performance evaluation systems when decision rights span hierarchical levels of the organization.

The implicit incentive effects of horizontal monitoring and team member dependence on individual performance

2016 Contemporary Accounting Research 33 (3): 889–919

Sedatole, K. L., A. Swaney, and A. Woods

This study examines the implicit incentive effects of horizontal monitoring and team member dependence for individuals working in teams but facing explicit incentives based solely on measures of individual performance. We combine proprietary performance data with survey data for 133 internal auditors. We show that the social influences of relatively high levels of both horizontal monitoring and team member dependence provide implicit incentives that motivate individual performance, making the provision of team rewards unnecessary to ensure individual and team productivity. We conclude that horizontal monitoring and team member dependence are complementary control mechanisms whose effectiveness helps explain the observed practice of organizing work into teams without explicit team based rewards.

Do the incentive effects of relative performance measurement vary with the ex ante probability of promotion?

2016 Management Accounting Research 30: 18-31.

Demere, W., Krishnan, R., K. L. Sedatole, and A. Woods

This study examines performance effects arising from the use of relative performance measurement (RPM) for promotion decisions in the organizational labor market. We use proprietary archival and survey data from the internal audit department of a large organization to document that the use of RPM positively interacts with the ex ante probability of promotion to influence performance. Thus, our study shows that while RPM may benefit employees by reducing uncertainty in incentive compensation as predicted by theory, the incremental performance benefits derived from the use of RPM as a promotion mechanism depend on the employee’s promotion prospects. Specifically, we find greater (lower) performance benefits associated with the use of RPM when an employee’s probability of promotion is greater (lower). Our findings suggest that RPM may be more effective in firms where there are opportunities for promotion at each organizational level.

Do extant management control frameworks fit the alliance setting? A descriptive analysis

2015 Industrial Marketing Management, special issue on Accounting and Marketing Perspectives of Value Creation in Inter-firm Collaboration in Industrial Markets 46: 36–53

Anderson, S. W., M. H. Christ, H. C. Dekker, and K. L. Sedatole

see journal

The use of management controls to mitigate risk in strategic alliances: Field and survey evidence

2014 Journal of Management Accounting Research 26 (1): 1-32

Anderson, S. W., M. H. Christ, H. C. Dekker, and K. L. Sedatole

see journal

The use of contract adjustments to lengthen the CEO horizon in the presence of internal and external monitoring

2013 Journal of Management Accounting Research 25 (1): 199-229

Dikolli, S. S., S. L. Kulp, and K. L. Sedatole

Winner of the 2014 Journal of Management Accounting Research Best Paper Award. see journal

Evidence on the cost hierarchy: The association between resource consumption and production activities

2013 Journal of Management Accounting Research 25 (1): 119-141

Anderson, S. W., and K. L. Sedatole

see journal

Sticks and carrots: An experimental investigation of contract frame and effort in agency relationships

2012 The Accounting Review 87 (6): 1913-1938

Christ, M. H., K. L. Sedatole, and K. L. Towry

Presented at the 2012 Experimental Economics, Accounting and Society: A Conference in Memory of John Dickhaut, Economic Science Institute, Chapman University. Winner of the 2010 AAA MAS Research Conference Outstanding Paper Award. see journal

The use of management control mechanisms to mitigate moral hazard in the decision to outsource

2012 Journal of Accounting Research 50 (2): 553-592

Sedatole, K. L., D. Vrettos, and S. K. Widener

Presented at the 2011 Journal of Accounting Research Conference. see journal

The use of collaborative interfirm contracts in the presence of task and demand uncertainty

2011 Contemporary Accounting Research 28 (4): 1397–1422

Krishnan, R., F. Miller, and K. L. Sedatole

see journal

Integrated information systems and alliance partner trust

2011 Contemporary Accounting Research 28 (3): 1018-45

Nicolaou, A., K. L. Sedatole, and N. Lankton, N

see journal

Employees’ subjective valuations of their stock options: Evidence on the distribution of valuations and the use of simple anchors

2011 Contemporary Accounting Research 28 (3): 747–93

Farrell, A., S. Krische, and K. L. Sedatole

Winner of the 2016 AAA MAS Impact on Management Accounting Practice Award. see journal

Drivers and consequences of short-term production decisions: Evidence from the auto industry

2011 Contemporary Accounting Research 28 (1):83-123

Bruggen, A., R. Krishnan, and K. L. Sedatole

Winner of the 2012 AAA MAS Impact on Management Accounting Practice Award see journal

An empirical examination of goals and performance-to-goal following the introduction of an incentive bonus plan with participative goal-setting

2010 Management Science 56 (1): 90-109

Anderson, S. W., H. C. Dekker, and K. L. Sedatole

Winner of the 2012 AAA Notable Contributions to Management Accounting Literature Award. Winner of the 2006 AAA MAS Research Conference Outstanding Paper Award. see journal

Transient institutional ownership and CEO contracting

2009 The Accounting Review 84 (3): 737-770

Dikolli, S. S., S. L. Kulp, and K. L. Sedatole

see journal

Improvements in the information content of non-financial forward-looking performance measures: A taxonomy and application

2007 Journal of Management Accounting Research 19: 71-104

Dikolli, S. S. and K. L. Sedatole

see journal

Measuring customer relationship value: The role of switching cost

2007 Contemporary Accounting Research 24 (1): 93-132

Dikolli, S. S., W. R. Kinney, and K. L. Sedatole

see journal

The effect of control systems on trust and cooperation in collaborative environments

2005 The Accounting Review 80 (2): 477-500

Coletti, A. L., K. L. Sedatole, and K. L. Towry

Winner of the 2009 AAA Notable Contributions to Management Accounting Literature Award see journal

Relating e-satisfaction to behavioral outcomes: An empirical study

2004 Journal of Services Marketing 18 (4): 290-302

Bansal, H. S., S. S. Dikolli, S. S., G. McDougall, and K. L. Sedatole

see journal

Management accounting for the extended enterprise: Performance management for strategic alliances and networked partners

2003 In Management Accounting in the Digital Economy, A. Bhimani, Ed., London: Oxford University Press

Anderson, S. W. and K. L. Sedatole

see book

The effect of measurement alternatives on a non-financial quality measure’s forward-looking properties

2003 The Accounting Review 78 (2): 555-580

Sedatole, K. L.

see journal

Sourcing parts of complex products: Evidence on transactions costs, high-powered incentives and ex-post opportunism

2000 Accounting, Organizations & Society 25 (8): 723-749

Anderson, S. W., D. Glenn, and K. L. Sedatole

see journal

Designing quality into products: The use of accounting data in new product development

1998 Accounting Horizons 12 (3): 213-233

Anderson, S. W. and K. L. Sedatole

see journal

Research Spotlight

In the News (25)

Expert weighs in on Georgia's ability to claim unborn children as dependents on taxes

Fox 5 Atlanta  tv


"The new rules allow for an exemption on the state tax return for unborn children as soon as the heart beat is detected," said Karen Sedatole, an accounting professor at the Goizueta Business School at Emory University.

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Women who are pregnant in Georgia can now claim unborn child on taxes

CBS46 Atlanta  tv


The Georgia Department of Revenue says that families who are expecting a child or children can now claim the unborn child on their taxes. The new guidance was released on their website on Monday. It says the tax change is due to the Supreme Court’s ruling related to Roe v Wade and the Court of Appeal’s decision to allow Georgia’s “Heartbeat Law” to go into effect.

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Who’s Who in Atlanta Education – Highlighting 100 Leaders along the Learning Path in Metro Atlanta

Atlanta Business Chronicle  online


Karen Sedatole Interim John H. Harland Dean, Goizueta Business School at Emory University Education: Bachelor's degree, Baylor University; MBA, University of Texas at Austin; Ph.D., University of Michigan Career highlights: Sedatole was appointed in May 2020. Prior to joining the Emory faculty in 3017, she was the Russell E. Palmer Endowed Professor of Accounting at Michigan State University. She has also held academic appointments at the University of Texas at Austin and the Stephen F. Austin State University.

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12 Inspiring Female B-School Deans Share Leadership Lessons

Poets & Quants  online


“Don’t be afraid to stretch yourself. Have confidence that you will discover within yourself the knowledge and intuition you need to meet the challenges you will face”

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Winners of the 2020 David Solomons Prize

Management Accounting Research  


The Editor-in-Chief of Management Accounting Research is pleased to announce that the winners of the 2020 David Solomons Prize are Shannon Anderson, Henri Dekker, Karen Sedatole, and Eelke Wiersma for their article, When one size does not fit all: Using ex post subjective ratings to provide parity in risk-adjusted compensation.

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Deans From Top B-Schools Share 2021 Resolutions

Poets & Quants  online


Most of us use the occasion of a new year to resolve personal changes and improvements. Business school deans and others in graduate business education leadership tend to be more ambitious. Every December for the last few years, Poets&Quants has asked deans and others at the top B-schools around the world to share their plans for the coming year — see previous versions of this story here and here. This year, after the trauma of a worldwide pandemic and its economic reverberations, as well as the resounding cultural repercussions of racial reckoning in the United States, more were eager to share their visions for the coming year than ever before — not predictions, which we collected for another story, but resolutions, specifically what they intend to use their considerable platforms to help bring about.

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America Amplified: Life, Community, and COVID-19

NPR  radio


Are we ready to reopen more businesses right now? It's May, and that means more states across America will begin lifting stay-at-home restrictions put in place to curb the spread of the coronavirus pandemic. Are we, as a nation, ready for this? Hosts Brian Ellison of KCUR in Kansas City, Missouri, and John Dankosky of New England Public Radio explore the economic and emotional strife we're facing. On the one hand, businesses that have been closed and people out of work need to restart. On the other, widespread testing and a vaccine are not yet available. You'll hear from Pedro Soto, entrepreneur and president and CEO of Hygrade Precision Technologies in Plainville, Connecticut, Laura Norris, owner of Ragazza Italian restaurant in Kansas City, Missouri, Karen Sedatole, interim dean of Emory University's Goizueta Business School in Atlanta, Georgia, and Rashaun Clark, owner of a salon and Urban Cafe in Kansas City, Missouri.

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Sedatole appointed interim dean of Emory’s Goizueta Business School

Emory University  online


Karen Sedatole, Goizueta Advisory Board Term Professor of Accounting, has been appointed interim dean of the Goizueta Business School, effective May 30. "Karen Sedatole is committed to Goizueta’s core value of principled leadership that serves as the foundation for preparing students to pursue careers in business,” says Jan Love, interim provost and executive vice president for academic affairs. "The Goizueta community will benefit from Karen’s understanding and support of the school’s approach to providing academic expertise and research in business partnerships that benefits society.”

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How to blend insight with data analytics to improve forecasts

CFO Dive  online


CFOs can improve the accuracy of their sales estimates — and, ultimately, earnings forecasts — by supplementing statistical modeling with the human-judgment side of forecasting, Karen Sedatole, an accounting...

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Exploring the Efficacy of Monetary Incentives to Motivate Employees

IEDP Developing Leaders  online


In a modern workplace no longer characterized by rigid hierarchies and where power is more diffused, traditional methods of motivation may no longer be enough. We have come to understand the value of providing people with ‘intrinsic motivation’ – a sense of purpose, the importance of creative, interesting work, and maintaining work-life balance. We have naturally moved away from a sole dependence on monetary incentives.

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Alternative Rater Systems Present Opportunities, Challenges

WorldatWork/Workspan Research in Brief  online


Nearly half of respondents (48%) in WorldatWork’s “Contemporary Performance Evaluation Practices Survey” use alternative raters in their performance evaluation systems.

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Calibration Committees Lead to Better Performance Assessments

WorldatWork/Workspan Daily  online


Deploying calibration committees is an effective way to mitigate bias in performance assessments. This is one of several substantive findings in “Contemporary Performance Evaluation Practices Survey,” conducted by WorldatWork in partnership with researchers at Tulane University, that sheds light on the current state of performance evaluation processes. The 254 compensation professionals surveyed are WorldatWork members who primarily work for companies with revenues greater than $100 million.

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Performance Evaluation Practices Missing the Mark

WorldatWork/Workspan Research in Brief  online


New survey data suggests that companies might want to reconsider their performance evaluation practices. According to WorldatWork’s “Contemporary Performance Evaluation Practices Survey,” conducted in collaboration with a team of researchers led by Jasmijn Bol, Ph.D., of Tulane University, only 47% of responding organizations are satisfied with their performance evaluation processes.

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Sedatole, K. 2019. Irrational but Predictable! When to Use Monetary Incentives to Motivate Employees

Ivy Exec Webinar  online


Kohn boldly proclaims “science has confirmed” that monetary rewards amount to “bribes” that don’t work. If that’s true, why do virtually all modern business organizations provide employees monetary incentives for performance? It turns out that the truth about the effectiveness of monetary rewards in business settings is more nuanced than Kohn suggests.

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How a calibration committee can correct bias in employee evaluations

HR Dive,  online


Calibration committees can correct performance evaluation scores inflated or deflated by a manager's bias or inconsistent standards, according to a study published by Harvard Business Review. The report examined a multinational organization's use of calibration committees over three years and found that they refined the consistency of the evaluation process, but decreased the variation of the ratings, which complicated the identification of high and low performers.

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Why Managers Shouldn’t Have the Final Say in Performance Reviews

Harvard Business Review  


Performance evaluation systems are critical for evaluating, motivating, and rewarding employees, but companies are hard-pressed to find a system that achieves these goals and promotes fair evaluations. Inconsistencies and biases in the evaluation process can leave employees dissatisfied and demotivated. One way to address this is with calibration committees, where senior leaders review batches of performance ratings and decide whether to adjust them. A recent study of this practice found that the committees produce more-consistent ratings, generally by correcting for inflated ratings of employee performance.

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Money For Lunch

Bert Martinez's shows  radio


Karen Sedatole is a Professor of Accounting at Emory University’s Goizueta Business School. Along with accounting research colleagues from the College of William and Mary and the University of Missouri, she has conducted one of the first studies on the use of performance evaluation “calibration committees.” The study Karen is going to tell us about focuses on how to improve the measurement of performance.

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Lenz on Business

Lenz Marketiing  radio


It’s easy to simply describe accounting as a numbers game, but it’s much more than that. In fact, it’s a multifaceted discipline and one that this week’s guest researches for a living. How does accounting play a role in business forecasting and performance reviews? Award-winning researcher Karen Sedatole answers these and other questions.

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Improving Performance Evaluations

Human Resource Executive  online


It’s long been known that supervisors often apply different standards during employee evaluations and that personal biases can often slip into the process. However, there is now empirical evidence that calibration committees—which serve to adjust employee ratings assigned by supervisors—are an effective approach to help ensure consistency and fairness across performance ratings, according to a three-year academic study.

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WorkZone: Can your supervisor be trusted to review your work?

Pittsburgh Post-Gazette  print


Rating the performance of employees can be one of a supervisor’s least favorite tasks. Often times supervisors give better reviews than employees deserve because they want to be liked, play favorites or worry that unfavorable reviews will reflect poorly on their own performance. The reviews are even more complicated when the criteria are subjective — does a person work well with a team or think through complex issues? — rather than objective, like how many widgets does the employee produce each week.

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Third-party risk: How to trust your partners

Journal of Accountancy  online


Economists once assumed that the new intercompany partnerships of the 1980s and 1990s would give way to mergers and joint ventures. Yet many services and goods today are delivered not by monolithic firms but by sets of companies that bridge sectors and continents. Businesses small and large are relying on networks of allies to reach new markets and capital, creating relationships that are lasting longer than anyone expected. In response, a team of researchers from four universities in the United States and Amsterdam has examined how firms are measuring and controlling risk in this complex new world.

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Professors awarded for management accounting research

Journal of Accountancy  


Their paper, "Employees' Subjective Valuations of Their Stock Options: Evidence on the Distribution of Valuations and the Use of Simple Anchors," explores the benefits of educating employees on understanding the value of employee stock options as part of compensation.

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Carrots Are More Powerful Motivators than Sticks, New Research Finds

Incentive Magazine  online


A new study finds that the promise of an incentive or bonus for a particular performance is not only more likely to create a trusting workplace, but to boost employee performance even in areas that are not being incentivized.

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Employees Motivated By Rewards, Not Penalties

FOXBusiness  online


The carrot, not the stick, is what that drives productivity in the workplace, according to new research. The study by Michigan State University associate professor of accounting Karen Sedatole revealed that the promise of a reward motivates employees Opens a New Window. more than the threat of a penalty.

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Why the Big Three Put Too Many Cars on the Lot

CFO.com  online


Ford, General Motors, and Chrysler used “absorption costing” to make themselves look more profitable, researchers say. But the practice can be costly, and other companies may want to think twice before they follow suit.

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