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Open Access
Article
Publication date: 27 January 2023

Alex Almici

This paper aims to verify whether the integration of sustainability in executive compensation positively affects firms’ non-financial performance and whether corporate governance…

3301

Abstract

Purpose

This paper aims to verify whether the integration of sustainability in executive compensation positively affects firms’ non-financial performance and whether corporate governance characteristics enhance the relationship between sustainability compensation and firms’ non-financial performance and to expand the domain of the impact of sustainability on non-financial performance.

Design/methodology/approach

This analysis is based on a sample of companies listed on the Milan Italian Stock Exchange from the Financial Times Milan Stock Exchange Index over the 2016–2020 period. Regression analysis was used by using data retrieved from the Refinitiv Eikon database and the sample firms’ remuneration reports.

Findings

The findings of this paper show that embedding sustainability in executive compensation positively affects firms’ non-financial performance. The results of this paper also reveal that specific corporate governance features can improve the impact of sustainability on non-financial performance.

Research limitations/implications

This analysis is limited to Italian firms included in the Financial Times Milan Stock Exchange Index; however, the findings are highly significant.

Practical implications

The findings provide regulators with useful insights for considering the integration of sustainability goals into executive remuneration. Another implication is that policymakers should require – at least – listed firms to fulfil specific corporate governance structural requirements. Finally, the findings can provide investors and financial analysts with a greater awareness of the role played by executive remuneration in the long-term value-creation process.

Originality/value

This paper contributes to addressing the relationship among sustainability, remuneration and non-financial disclosure, drawing on the stakeholder–agency theoretical framework and focusing on Italian firms. This issue has received limited attention with controversial results in the literature.

Details

Meditari Accountancy Research, vol. 31 no. 7
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 4 August 2020

Lawrence Musiitwa Kyazze, Isa Nsereko and Isaac Nkote

The purpose of this paper is to examine the relationship between cooperative practices of accountability, cooperative ownership, advanced communication and non-financial…

Abstract

Purpose

The purpose of this paper is to examine the relationship between cooperative practices of accountability, cooperative ownership, advanced communication and non-financial performance in savings and credit cooperative societies.

Design/methodology/approach

The study uses a cross-sectional research design and adopted a mixed methodological approach were hypotheses were statistically tested using structural equation modeling based on survey data (n = 220) and narratives from qualitative findings supported the quantitative findings from savings and credit cooperative societies.

Findings

The findings reveal that cooperative practices of accountability, cooperative ownership and advanced communication are significantly and positively associated with non-financial performance of savings and credit cooperative societies.

Originality/value

This study provides empirical evidence on the relationship between cooperative practices of accountability, cooperative ownership and advanced communication and non-financial performance in savings and credit cooperative societies in emerging economies like Uganda. To the best of the authors’ knowledge, there is limited or no study that has used the construct of agency theory in explaining the relationship between cooperative practices and non-financial performance in savings and credit cooperative societies.

Details

International Journal of Ethics and Systems, vol. 36 no. 3
Type: Research Article
ISSN: 2514-9369

Keywords

Article
Publication date: 7 April 2015

Chong M. Lau

The purpose of this paper is to ascertain if it is procedural fairness, or role clarity, or both procedural fairness and role clarity that mediate the relationship between…

1564

Abstract

Purpose

The purpose of this paper is to ascertain if it is procedural fairness, or role clarity, or both procedural fairness and role clarity that mediate the relationship between non-financial measures and managerial performance. Role clarity and procedural fairness may mediate the relationship between performance measures and managerial performance.

Design/methodology/approach

A survey questionnaire was used to collect the required data. The sample was drawn from 149 managers from 103 large manufacturing organisations located in the UK. The data were analysed by structural equation modelling.

Findings

The results indicate that it is role clarity that significantly mediates the relationship between non-financial measures and managerial performance. Surprisingly, procedural fairness has no significant mediating effect on the relationship.

Originality/value

To date, no prior studies have investigated systematically the effects of non-financial measures as well as the mechanism by which non-financial measures influence role clarity, procedural fairness and managerial performance. This study contributes by incorporating both procedural fairness and role clarity within an integrated model. This assists the research to ascertain precisely which variable (procedural fairness or role clarity) mediates the relationship between non-financial measures and managerial performance as well as the relative strengths of the two mediating variables.

Details

Pacific Accounting Review, vol. 27 no. 2
Type: Research Article
ISSN: 0114-0582

Keywords

Open Access
Article
Publication date: 12 November 2021

Makoto Kuroki and Katsuhiro Motokawa

This study aims to provide evidence of how budget officers use non-financial and accrual-based cost information in the budgeting process and how the usage of this information is…

4989

Abstract

Purpose

This study aims to provide evidence of how budget officers use non-financial and accrual-based cost information in the budgeting process and how the usage of this information is influenced by financial constraints.

Design/methodology/approach

A randomized survey-based field experiment investigating budget officers in 546 Japanese local governments (LGs) was conducted. This allowed us to identify the budget officers' decision-making in the public sector budgeting process by creating and analyzing primary data with regression models.

Findings

We found that budget officers suppress budget amounts based on non-financial information of good performances. Under fiscal constraints, officers further reduce budget amounts using information on high accrual-based costs and poor non-financial performance.

Originality/value

Our survey-based field experiment allowed us to obtain primary data from officers making budget decisions. To the best of our knowledge, this study provides the first evidence that non-financial good and poor performance information and accrual-based cost information affect budget officers' decision-making under financial constrain.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 34 no. 6
Type: Research Article
ISSN: 1096-3367

Keywords

Article
Publication date: 1 August 2003

Mostaque Hussain

A number of Management Accounting (MA) researches have demonstrated the shortcomings of traditional accounting‐based performance measures for today’s uncertain Economic Conditions…

1309

Abstract

A number of Management Accounting (MA) researches have demonstrated the shortcomings of traditional accounting‐based performance measures for today’s uncertain Economic Conditions (EC) in technologically advancement competitive environments. The MA literature suggests the impact of economic pressures on MA practices, though there are different notions regarding the impact of EC on Non‐financial Performance Measurement (NFPM). Some researchers argue that management needs an interactive information system in more volatile and uncertain EC, and accordingly, the mode of the use of financial performance measures is greater in uncertain EC. However, some welldocumented predictions about the relationship of the external environmental, viz a viz uncertain economic environments, with the need of managers’ financial and nonfinancial information. Taking these aspects into account, it is important to consider the effect of EC on MA performance measures and their degree of responsiveness and adaptability to particular circumstances. Thus, this research made an attempt to study the impinge of EC on NFPM in Banks/Financial Institutions (BFI). The multiple case study approach, especially the study of different kinds of BFI in different macro environments, provides an opportunity to examine the effect of NFPM in different environments. The cross‐country studies help to demonstrate the rationale for the impact of EC on NFPM in three countries (Finland, Sweden and Japan). Results of this study anticipate that the uncertainty of EC increase pressures on management to improve and measure financial performance in order to survive in the hostile EC. To the contrary, managers would improve as well as measure non‐financial performance in the organizations.

Details

Managerial Finance, vol. 29 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 January 2021

Mahdi Salehi and Arash Arianpoor

The study's main objective is to identify business sustainability performance indicators and analyze the mutual relationship between different business sustainability components…

1109

Abstract

Purpose

The study's main objective is to identify business sustainability performance indicators and analyze the mutual relationship between different business sustainability components in Iran.

Design/methodology/approach

To achieve research objectives, the 125 indicators of Business Sustainability Performance in Arianpoor and Salehi (2020) were used. For data collection, a questionnaire is designed and developed. Moreover, the Delphi method is used to determine the indicators related to business sustainability performance. Accordingly, we attempted to send the questionnaire to 346 experts and qualified opinion-leaders in the study area to utilize their opinions in our project. Finally, 108 questionnaires were analyzed statistically.

Findings

In this study, the confirmatory factor analysis (CFA), binomial test, one sample t-test, one sample Kolmogorov–Smirnov test and Kruskal–Wallis test are used. The results of statistical tests show that among 125 proposed indicators, 11 indicators were eliminated. Hence, to assess business sustainability performance in the listed firm on the Tehran Stock Exchange, 114 indicators were analyzed. To achieve the study's objective, the relationship between financial and non-financial sustainability performance and their effect is analyzed using the Smart PLS Software. Findings indicate that there is a mutual relationship between financial and non-financial sustainability performance in Iran. There is also a relationship between the operational component and research component and non-financial sustainability performance. In contrast, as for the growth component and non-financial sustainability performance, there is no significant relationship. Also, root means squared error (RMSE) values suggest a reasonable model-data fit.

Originality/value

The type and characteristics of different regions have a significant role in the reporting and differ according to different economic conditions. The discussion of business sustainability and its reporting is important; therefore, essential indicators were identified in this study. In addition, all aspects of sustainability performance are considered cohesively to analyze the mutual relationship between different components of sustainability performance and to be able to make more appropriate decisions in future studies about performance evaluation and reporting using the results of this paper.

Content available
Article
Publication date: 11 October 2021

MyoJung Cho and Salma Ibrahim

This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in…

1148

Abstract

Purpose

This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in incentive contracts.

Design/methodology/approach

Using hand-collected performance measure data in a sample of S&P 500 firms across the period 1994–2010, this study investigates the sensitivity of CEO bonus and cash pay to shareholder wealth of firms that use non-financial performance (NFPM) measures of varying types and contractual weights in their bonus contracts along with financial measures (NFPM firms) in comparison to that of firms using financial measures only (FPM firms).

Findings

This study finds evidence that the pay-performance sensitivity is stronger in NFPM firms than in FPM firms. These results are driven by the use of CEO individual goals and operational efficiency. Furthermore, when using environmental, social and governance factors, the pay-performance sensitivity is stronger in terms of accounting performance only. This study also finds that using NFPM enhances pay-performance sensitivity more as their contractual weights increase and as financial risk increases.

Practical implications

These findings are important to stakeholders, and especially regulators in understanding incentive effects of alternative performance measures. This study also sheds light on what types of non-financial measures are better in helping firms align CEOs’ incentives to shareholders’ interests.

Originality/value

This study contributes to prior research on benefits of non-financial information within the context of executive compensation. This study presents original results about the effects of contractual weights of non-financial measures and financial risk on CEO pay-performance sensitivity. This study also presents new insights regarding how different types of non-financial measures affect CEO pay-performance sensitivity.

Details

Journal of Financial Reporting and Accounting, vol. 20 no. 2
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 December 2005

Mostaque Hussain

To study the nature of management accounting performance measures in the Financial Services Industry (FSI). The nature of Performance Measurement (PM), specially non‐financial PM…

6873

Abstract

Purpose

To study the nature of management accounting performance measures in the Financial Services Industry (FSI). The nature of Performance Measurement (PM), specially non‐financial PM in FSI (service “shop”) has not been explored before.

Design/methodology/approach

This exploratory multiple case study consists of survey, interviews with questionnaire, individuals' (senior management and executives) interviews, collecting primary and secondary sources of information as well as literature surveys.

Findings

The results of this study demonstrate that the actual practices of the recent trends of management accounting in non‐financial PM are negligible in the studied financial institutions, and management of studied banks paying more attention to improve and measure financial performance than that to non‐financial performance for different reasons that affect the function/operation of FSI.

Research limitations/implications

The field study is being conducted without a conceptual/theoretical framework. An explanatory case study with particular theoretical framework/model could make possible to discuss the factors that affect non‐financial PM in this particular industry. Moreover, a comparative study with manufacturing industry would make the research results more robust.

Practical implications

A stable economic condition and competition that would increase the need and importance of non‐financial PM in FSI as well as in other services (and even in manufacturing industries).

Originality/value

This paper explores the nature of management accounting PM particularly in FSI.

Details

European Business Review, vol. 17 no. 6
Type: Research Article
ISSN: 0955-534X

Keywords

Article
Publication date: 16 January 2009

Therese A. Joiner, X. Sarah Yang Spencer and Suzanne Salmon

Against a background of a customization imperative embraced by manufacturing firms in industrialised nations and the concomitant call for more balanced performance measurement…

2683

Abstract

Purpose

Against a background of a customization imperative embraced by manufacturing firms in industrialised nations and the concomitant call for more balanced performance measurement systems (PMS), this study seeks to examine the mediating role of both non‐financial and financial performance measures in the relationship between a firm's strategic orientation of flexible manufacturing and organisational performance.

Design/methodology/approach

A path‐analytical model is adopted using questionnaire data from 84 Australian manufacturing firms.

Findings

The results indicate that, first, firms emphasising a flexible manufacturing strategy utilise non‐financial as well as financial performance measures; second, these performance measures are associated with higher organisational performance; and third, there is a positive association between a firm's strategic emphasis on flexible manufacturing and organisation performance via non‐financial and financial performance measures.

Practical implications

While there is agreement on the beneficial role of non‐financial performance measures in supporting strategic priorities associated with customization strategies, equivocal research results have emerged on the role of financial performance measures in this context. The study underscores the importance of both non‐financial and financial performance measures in this context.

Originality/value

The paper reinstates the value of financial performance measures for firms pursuing customization type strategies and adds to one's knowledge of PMSs by exploring the intervening role of such systems in linking flexible manufacturing strategy to organisation performance.

Details

International Journal of Productivity and Performance Management, vol. 58 no. 2
Type: Research Article
ISSN: 1741-0401

Keywords

Open Access
Article
Publication date: 31 January 2023

Gianluca Vitale, Sebastiano Cupertino and Angelo Riccaboni

Focusing on the Agri-Food and Beverage sector, the paper investigates the direct effect of worldwide mandatory non-financial disclosure on several financial dimensions as well as…

3373

Abstract

Purpose

Focusing on the Agri-Food and Beverage sector, the paper investigates the direct effect of worldwide mandatory non-financial disclosure on several financial dimensions as well as its moderating effects on the relationship between sustainability and financial performance.

Design/methodology/approach

The authors performed fixed-effect regressions on a sample of 180 global listed companies, considering a period of eight years. The authors also tested the moderating effects of non-financial disclosure regulation on the relationship between sustainability and financial performance.

Findings

The authors found a positive direct impact of mandatory non-financial disclosure on Operating Return on Asset, Return on Equity and Return on Sales. The analysis also highlighted the negative moderating effects of non-financial reporting regulation on the relationship between sustainability issues and financial performance. As for the Cost of Debt, the authors found mixed results.

Research limitations/implications

This study considers a short-term perspective focusing on a limited sample composed of companies playing a key role in the global agri-food system.

Practical implications

The paper identifies which financial performance dimensions are positively or negatively affected by mandatory non-financial disclosure. Accordingly, managers can rearrange corporate activities to deal with further reporting normative requirements concurrently preserving financial performances and fostering corporate sustainability.

Social implications

This study recommends fostering mandatory non-financial disclosure to increase corporate transparency fostering the sustainability transition of the Agri-Food and Beverage industry.

Originality/value

The paper highlights global mandatory non-financial disclosure effects on financial performance considering a sector that is cross-cutting impactful on plural sustainability issues.

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