Abstract
This paper investigates how narrative feedback affects employee performance. We use archival data from a European e-commerce firm to investigate the effects of the length, level of detail, and causal understanding facilitation of narrative feedback on performance improvement. We find that both higher levels of detail in feedback regarding strengths and more facilitation of causal understanding in feedback regarding weaknesses increase the likelihood of performance improvements. We also find a negative effect of inconsistent signals from ratings and narrative feedback. In additional analyses, we show differing effects for employees who receive positive or negative feedback surprises and differing effects on stronger and weaker areas of performance. Our findings contribute to the accounting literature on feedback by showing which aspects of narrative feedback can help improve future employee performance, thereby advancing our understanding of the types and characteristics that make feedback valuable.
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