The Balanced Scorecard: The Effects of Assurance and Process Accountability on Managerial Judgment

Libby, Theresa; Salterio, Steven E.; Webb, Alan

doi:10.2139/ssrn.317486

Cited by 70 publications

(117 citation statements)

References 74 publications

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“…In contrast to recent studies on effects of common and unique measures (e.g., Salterio 2000, 2002;Banker et al 2004;Libby et al 2004;Roberts et al 2004), all of our measures are common measures. As in Lipe and Salterio (2000), both regions performed better than target on all measures.…”

Section: Tasksmentioning

confidence: 68%

“…If their awareness were heightened, would the primacy effect disappear? Would accountability mitigate the primacy effect (Libby et al 2004)? These issues should be further investigated and practical remedies developed for accounting practice.…”

Section: Discussion Limitations Suggestions and Conclusionmentioning

confidence: 99%

“…Classification of most of the 16 measures used in prior Balanced Scorecard research (e.g., Salterio 2000, 2002;Banker et al 2004;Libby et al 2004;Roberts et al 2004) as financial-or nonfinancial-oriented is straightforward. A few of the measures, such as Percent Returns to Suppliers Due to Quality Problems and Percent Sales from Items Designated by Head Buyer as Market Leaders could be construed as ambiguous.…”

Section: Tasksmentioning

confidence: 99%

“…Halford et al (2005) established human decision makers can mentally process no more than four information items, as compared to prior research (Miller 1956) suggesting an upper limit of five to nine information items can be comprehended, before processing quality deteriorates to chance levels. Performance measurement reports, such as the Balanced Scorecard, typically employ 16-24 measures (cf., Banker et al 2004;Dilla and Steinbart 2005;Libby et al 2004;Ittner et al 2003). Most stakeholder value reports contain even more measures.…”

Section: Introductionmentioning

confidence: 99%

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Stakeholder value disclosures: anchoring on primacy and importance of financial and nonfinancial performance measures

2010

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In the growing debate about stakeholder values, there has been little discussion about information overload or whether the requested disclosures can be effectively used. Stakeholder advocates call for complicated and massive environmental and related social disclosures while not considering how information overload might affect the discourse about corporate performance. Stakeholders, including shareholders, plead for more transparency in financial statements, management discussion and analysis (MDA), and other corporate disclosures. As we know, shareholders and boards of directors are most concerned with the 'Holy Trinity' of earnings per share, dividends and market value changes. We believe that managers and stakeholders involved in performance evaluations have multiple interests that extend beyond traditional shareholder value measures. We note that the Balanced Scorecard (BSC) was developed as one tool to reflect and communicate these multiple measures. We test how managers use (or ignore) multiple performance measures and we posit that stakeholders will face many of the same constraints when using and processing multiple disclosures including Corporate Social Reports (CSR), environmental, or similar disclosures. While we do not directly test a wide variety of stakeholder disclosures, we examine eight (four for a single subject) shareholder values (financial measures) and four stakeholder values (nonfinancial measures). The eight measures included in our research instruments serve as proxies for the multiple concerns that might be of interest to many stakeholders. Note that stakeholders are likely to be extremely interested in nonfinancial performance measures, while many shareholders will likely concentrate on financial performance measures. Field research has reported managers tend to favor financial measures while discounting or ignoring nonfinancial measures when evaluating subordinates, making it difficult to align performance evaluations and incentives with corporate strategies (Ittner et al. Account Rev 78:725-758, 2003). In this study, we find the relative weights managers place on financial and nonfinancial performance measures are influenced by both (1) presentation order and (2) the relative importance of specific measures. When financial measures are presented first, the manager who performs better on financial measures is rated higher than the manager who performs better on nonfinancial measures. However, when nonfinancial measures are presented first, managers who excel on nonfinancial measures are rated higher. Reports that include financial measures that are relatively more (less) important also produce higher (lower) ratings for the manager who excels on financial measures. Thus, the relative weights that superiors place on financial and nonfinancial measures in evaluating corporate managers' performance are substantially anchored both by the order in which measures are presented as well as by the importance of the specific performance measures employed. Other stakeholder disclosures are likel...

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Section: Tasksmentioning

confidence: 68%

Section: Discussion Limitations Suggestions and Conclusionmentioning

confidence: 99%

Section: Tasksmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Stakeholder value disclosures: anchoring on primacy and importance of financial and nonfinancial performance measures

2010

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“…Recent BSC research (e.g., Libby, Salterio, & Webb, 2004;Roberts, Albright, & Hibbets, 2004) also has addressed the importance of choosing the "right" performance measures and the need for congruence between organizational goals and organizational reward structures. We will extend this research by examining the influence of congruence (or lack thereof) of organizational reward structures and organizational goals variously represented by two common strategy maps (i.e., their interactions).…”

Section: Introductionmentioning

confidence: 99%

The impact of strategy communications, incentives and national culture on balanced scorecard implementation

Carmona

Iyer

Reckers

2011

Advances in Accounting

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An accountability account: A review and synthesis of the theoretical and empirical research on felt accountability

2015

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Accountability is a fundamental element of all societies and the organizations that operate within them. This paper focuses on the individual-level accountability concept of felt accountability (also referred to in the literature as simply accountability), which can be described as the perceptions of one's personal accountability. We describe key theories that have formed the theoretical groundwork for the body of felt accountability literature, and discuss the empirical research published since the last major review of the accountability literature in the late 1990s. Empirical research has revealed that accountability has both constructive and deleterious consequences. Moreover, research examining accountability and key outcomes has produced mixed results, suggesting that consideration of moderators and nonlinear relationships are important when examining accountability. Although accountability is an important construct, there are many issues that have yet to be investigated by scholars. We identify limitations and gaps in the current body of the empirical research and conclude the paper with suggestions for scholars striving to make contributions to this line of research.

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The Balanced Scorecard: The Effects of Assurance and Process Accountability on Managerial Judgment

Cited by 70 publications

References 74 publications

Stakeholder value disclosures: anchoring on primacy and importance of financial and nonfinancial performance measures

Stakeholder value disclosures: anchoring on primacy and importance of financial and nonfinancial performance measures

The impact of strategy communications, incentives and national culture on balanced scorecard implementation

An accountability account: A review and synthesis of the theoretical and empirical research on felt accountability

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