Debiasing Scale Compatibility Effects when Investors Use Nonfinancial Measures to Screen Potential Investments

2008 ◽  
Vol 25 (3) ◽  
pp. 803-826 ◽  
Author(s):  
Kevin E. Jackson
Keyword(s):  
Nonfinancial Measures ◽  
Scale Compatibility

scholarly journals The Moderating Effect of Procedural Justice on the Effectiveness of the Balanced Scorecard in Improving Managerial Performance through Organizational Commitment

2010 ◽  
Vol 12 (3) ◽  
pp. 415
Author(s):  
Supriyadi Supriyadi
Keyword(s):  
Organizational Commitment ◽  
Procedural Justice ◽  
Balanced Scorecard ◽  
Moderating Effect ◽  
Managerial Performance ◽  
Financial Measures ◽  
The Balanced Scorecard ◽  
Nonfinancial Measures ◽  
The Impact ◽  
The Relationship

This study extends prior studies on the effectiveness of theBalanced Scorecard (BSC) to improve managerial performancedone by Lau and Mosser (2008) and Lau and Sholihin (2005).Specifically, the study empirically tests the moderating effects ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and managerial performance. Italso tests the impact of organizational commitment on performance.Based on survey data from 76 respondents, the results indicate thatperceived procedural justice in the use financial and nonfinancialdimensions of the BSC is associated with managers’ organizationalcommitment. It further finds that organizational commitment ispositively related to performance. The study extends the literatureby providing empirical evidence about the moderating effect ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and organizational commitment.Keywords: balanced scorecard; organizational commitment; financial measures;managerial performance; moderating effect; nonfinancial measures;procedural justice

scholarly journals Disclosure and Audit Implications of Nonfinancial Measures: A Teaching Case

2018 ◽  
Vol 12 (1) ◽  
pp. I1-I13 ◽  
Author(s):  
Matthew L. Hoag ◽  
Gabriel D. Saucedo
Keyword(s):  
Financial Statements ◽  
Risk Assessments ◽  
Microsoft Excel ◽  
Teaching Case ◽  
Fraud Risk ◽  
Nonfinancial Measures ◽  
Analytical Procedures ◽  
Fraud Risk Assessments ◽  
Substantive Analytical Procedures

SUMMARY This case introduces students to nonfinancial measures (NFMs) and encourages thoughtful consideration and discourse surrounding their reporting and use by managers and auditors. NFMs are commonly reported by companies to provide increased transparency of operations and to more effectively describe performance. External parties such as analysts and auditors make use of NFMs in performing valuation assessments, fraud risk assessments, and substantive analytical procedures. In completing this case, students will be exposed to actual NFMs disclosed in SEC filings and employ Microsoft Excel knowledge to perform foundational analytical procedures. Students will also analyze how these NFMs link to the financial statements, as well as reflect upon the implications of NFMs for both internal and external users.

On the Association between Current Period Budget Target Achievability and the Properties of Nonfinancial Measures

2016 ◽  
Vol 29 (2) ◽  
pp. 47-62 ◽  
Author(s):  
Jizhang Huang ◽  
Ramji Balakrishnan ◽  
Fei Pan
Keyword(s):  
Performance Metrics ◽  
Incentive Payment ◽  
Positive Interaction ◽  
Financial Measures ◽  
Current Period ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Incentive Contracting ◽  
Future Outcomes

ABSTRACT Firms usually employ nonfinancial performance metrics (NFPMs) to measure progress toward long-term outcomes. They also often evaluate current performance by comparing outcomes on financial measures with budgeted targets. Thus, they can motivate actions that sacrifice current profit for favorable future outcomes directly by increasing the rewards for such actions and indirectly by reducing their opportunity cost. Combining these arguments, we examine the relation between the properties (congruity and measurability) of NFPMs used in incentive contracting and the achievability of the current period budget target, where achievability is the probability of obtaining the incentive payment tied to current period performance. Survey data from 179 divisions in Chinese firms support our prediction of a positive (negative) association between the congruity (measurability) of NFPMs and budget achievability. We also document an expected positive interaction effect between congruity and measurability.

Strategy, Choice of Performance Measures, and Performance

2006 ◽  
Vol 18 (1) ◽  
pp. 185-205 ◽  
Author(s):  
Wim A. Van der Stede ◽  
Chee W. Chow ◽  
Thomas W. Lin
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Manufacturing Strategy ◽  
Measurement Systems ◽  
Nonfinancial Measures ◽  
Performance Measurement Systems ◽  
And Performance ◽  
The Relationship ◽  
Positive Effect ◽  
Extensive Performance

We examine the relationship between quality-based manufacturing strategy and the use of different types of performance measures, as well as their separate and joint effects on performance. A key part of our investigation is the distinction between financial and both objective and subjective nonfinancial measures. Our results support the view that performance measurement diversity benefits performance as we find that, regardless of strategy, firms with more extensive performance measurement systems—especially those that include objective and subjective nonfinancial measures—have higher performance. But our findings also partly support the view that the strategy-measurement “fit” affects performance. We find that firms that emphasize quality in manufacturing use more of both objective and subjective nonfinancial measures. However, there is only a positive effect on performance from pairing a qualitybased manufacturing strategy with extensive use of subjective measures, but not with objective nonfinancial measures.

Using a Bayesian Approach to Quantify Scale Compatibility Bias

2002 ◽  
Vol 48 (12) ◽  
pp. 1555-1568 ◽  
Author(s):  
Richard M. Anderson ◽  
Benjamin F. Hobbs
Keyword(s):  
Bayesian Approach ◽  
Scale Compatibility

scholarly journals The Attitudinal and Behavioral Effects of Nonfinancial Measures

2011 ◽  
Vol 13 (3) ◽  
pp. 267
Author(s):  
Putri Paramita Agritansia ◽  
Mahfud Sholihin
Keyword(s):  
Performance Evaluation ◽  
Organizational Commitment ◽  
Control Systems ◽  
Procedural Fairness ◽  
Management Control ◽  
Behavioral Effects ◽  
Management Control Systems ◽  
Managerial Performance ◽  
Nonfinancial Measures

A recent study by Lau and Moser (2008) found that the use of nonfinancial measures for managerial performance evaluation is positively associated with managerial performance via procedural fairness and organizational commitment. It is not clear, however, whether the findings are generalizable to other contexts. Using very different samples, the objectives of this study are to reexamine and to extend Lau and Moser’s model. Our paper is only able to partially support their model, suggesting that management control systems should be designed to fit the contexts.     

An Empirical Investigation of the Performance Consequences of Nonfinancial Measures

2003 ◽  
Vol 15 (1) ◽  
pp. 193-223 ◽  
Author(s):  
Amal A. Said ◽  
Hassan R. HassabElnaby ◽  
Benson Wier
Keyword(s):  
Performance Measures ◽  
Accounting Performance ◽  
Performance Improvements ◽  
Future Performance ◽  
Nonfinancial Measures ◽  
Stock Market Performance ◽  
Nonfinancial Performance ◽  
Performance Consequences ◽  
Nonfinancial Performance Measures ◽  
Performance Measurement Systems

Firms are increasingly implementing new performance measurement systems to track nonfinancial metrics such as customer and employee satisfaction, quality, market share, productivity, and innovation. This study examines the implications of nonfinancial performance measures included in compensation contracts on current and future performance. Contextual factors, environmental factors, and strategic plans vary across firms and, in turn, adopting appropriate nonfinancial measures determines the performance consequences of such measures. Our findings support the contention that firms that employ a combination of financial and nonfinancial performance measures have significantly higher mean levels of returns on assets and higher levels of market returns. Although we find evidence that the adoption of nonfinancial measures improves firms' current and future stock market performance, we find only partial support for accounting performance improvements. Overall, the results indicate that the association between the use of nonfinancial measures and firm performance is contingent on the firm's operational and competitive characteristics.

Determinants of Customer Loyalty and Financial Performance

2004 ◽  
Vol 16 (1) ◽  
pp. 183-205 ◽  
Author(s):  
Rodney E. Smith ◽  
William F. Wright
Keyword(s):  
Customer Satisfaction ◽  
Financial Performance ◽  
Customer Loyalty ◽  
Causal Model ◽  
Company Performance ◽  
Financial Outcomes ◽  
Revenue Growth ◽  
Nonfinancial Measures ◽  
Product Value ◽  
Customer Satisfaction And Loyalty

Recent research in accounting advocates nonfinancial measures of company performance, such as customer satisfaction and loyalty, as useful indicators of aspects of firm performance. But what are the drivers of customer satisfaction and loyalty? We provide an integrated causal model of company performance in the personal computer (PC) industry that simultaneously tests links between product value attributes resulting from business process performance, customer loyalty, and financial outcomes. Our results extend prior accounting research (e.g., Banker et al. 2000; Ittner and Larcker 1998) in two directions: (1) by explaining the determinants of customer loyalty, and (2) by clarifying the relation between customer loyalty and measures of financial performance. We report that product value attributes directly and differentially impact levels of customer loyalty as well as prevailing average selling prices. Furthermore, measures of customer loyalty explain levels of relative revenue growth and profitability, and relatively high customer loyalty engenders a competitive advantage in the PC industry.

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