Journal article
On the Association between Current Period Budget Target Achievability and the Properties of Nonfinancial Measures
Journal of management accounting research, Vol.29(2), pp.47-62
06/22/2017
DOI: 10.2308/jmar-51536
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.
Details
- Title: Subtitle
- On the Association between Current Period Budget Target Achievability and the Properties of Nonfinancial Measures
- Creators
- Jizhang Huang - Shanghai University of Finance and EconomicsRamji Balakrishnan - University of IowaFei Pan - Shanghai University of Finance and Economics
- Resource Type
- Journal article
- Publication Details
- Journal of management accounting research, Vol.29(2), pp.47-62
- Publisher
- Amer Accounting Assoc
- DOI
- 10.2308/jmar-51536
- ISSN
- 1049-2127
- eISSN
- 1558-8033
- Number of pages
- 16
- Grant note
- 201306480004 / China Scholarship Council (CSC); China Scholarship Council 71032005; 71272013; 71402086 / National Nature Science Foundation of China; National Natural Science Foundation of China (NSFC) 15JJD630008 / MOE Project of Key Research Institute of Humanities and Social Science in University Innovative Research Team of Shanghai University of Finance and Economics (IRTSHUFE)
- Language
- English
- Date published
- 06/22/2017
- Academic Unit
- Accounting
- Record Identifier
- 9984380428202771
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