Schiff and Hoffman (1996) found evidence that nonfinancial measures explain more of the variance in evaluations that focus on individual retail department managers while financial measures explain more variance in evaluations of the overall department. These findings are consistent with Attribution Theory, which holds that evaluators of performance ascribe cause to individual or environmental factors as they make judgments. This study expands this research by being the first to examine whether financial and nonfinancial measures affect multidivisional balanced scorecard performance evaluations differently when the focus of the evaluation is on the individual division president versus when the focus is on the overall division. The results of this study suggest that when evaluating individual performance, nonfinancial measures clearly affect the performance evaluations more than financial measures. When the focus is on the division, the influence of nonfinancial and financial measures is not differentiated. Additionally, the results suggest that the participants perceived nonfinancial measures to be more controllable than financial measures.
Krumwiede, K.R., Eaton, T.V., Swain, M.R. and Eggett, D. (2008), "A research note on the effects of financial and nonfinancial measures in balanced scorecard evaluations", Arnold, V., Clinton, B.D., Lillis, A., Roberts, R., Wolfe, C. and Wright, S. (Ed.) Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 11), Emerald Group Publishing Limited, Bingley, pp. 155-177. https://doi.org/10.1016/S1475-1488(08)11007-9
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