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Financial Performance Measures (financial + performance_measure)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Nonfinancial Performance Measures and Promotion-Based Incentives

JOURNAL OF ACCOUNTING RESEARCH, Issue 2 2008
DENNIS CAMPBELL
ABSTRACT In this paper, I examine the sensitivity of promotion and demotion decisions for lower-level managers to financial and nonfinancial measures of their performance and investigate the extent to which the behavior of lower-level managers reflects promotion-based incentives. Additionally, I test for learning versus effort-allocation effects of promotion-based incentives. I find that promotion and demotion decisions for store managers of a major U.S.-based fast-food retailer (QSR) are sensitive to nonfinancial performance measures of service quality and employee retention after controlling for financial performance. The likelihood of demotion in this organization is also sensitive to nonfinancial performance on the dimension of service quality, while the probability of exit is primarily sensitive to financial performance measures rather than nonfinancial performance measures. I also find evidence that the behavior of lower-level managers is consistent with the incentives created by the weighting of nonfinancial performance measures in promotion decisions. Managers in locations where there is a higher ex ante probability of promotion and a higher potential reward upon promotion demonstrate significantly higher levels and rates of performance improvement in service quality. Finally, consistent with promotion-based incentives inducing both effort-allocation and learning effects, I find that performance-improvement rates for service quality: (1) are higher in prepromotion periods in markets where promotions occur, (2) decrease immediately after the occurrence of a promotion in the same market area, and (3) remain higher than in markets where promotions do not occur. These findings provide some of the first empirical evidence on an alternative to the explicit weighting of nonfinancial metrics in compensation contracts as a mechanism for generating improvements in nonfinancial dimensions of performance. [source]

Nonprofit organization financial performance measurement: An evaluation of new and existing financial performance measures

NONPROFIT MANAGEMENT & LEADERSHIP, Issue 4 2003
William J. Ritchie
Consensus about financial performance measurement remains elusive for nonprofit organization (NPO) researchers and practitioners alike, due in part to an overall lack of empirical tests of existing and new measures. The purpose of the current study was to explore potential similarities of financial performance measures derived from two sources: current NPO research and key informant interviews with NPO foundation constituencies. The authors examined financial performance measurement ratios with data from fifteen Internal Revenue Service (IRS) Form 990 line items. Using factor analytic techniques, they found three performance factors, each with two associated financial measurement ratios, to be present. They categorized the performance factors as fundraising efficiency, public support, and fiscal performance. This article discusses implications of the findings and future research. [source]

The UK supermarket industry: an analysis of corporate social and financial performance

BUSINESS ETHICS: A EUROPEAN REVIEW, Issue 1 2002
Geoff Moore
In a previous paper (Moore, 2001), the headline findings from a study of social and financial performance over three years of eight firms in the UK supermarket industry were reported. These were based on the derivation of a 16-measure social performance index and a 4-measure financial performance index. This paper discusses the formulationof the indices and then reports on: discussions with two supermarket firms concerning the overall results; inter-relationships between individual financial performance measures; inter-relationships between individual social performance measures; stakeholder group analysis; and inter-relationships between turnover, age and gearing with social performance measures. The paper discusses these inter-relationships, incorporating comments from the interviews with the two supermarket firms, and reports on both factor and cluster analysis. The interviews lend support for Preston and O'Bannon's (1997) Available Funding Hypothesis in both its positive and negative form. The findings show that there are individual or combinations of related measures that could be used as surrogate measures for social and financial performance, instead of deriving a full index. However, the recommendation is that a full index continues to be used until there is further corroboration of these results. The findings also provide statistically significant support for the Negative Synergy Hypothesis (Preston and O'Bannon, 1997), show a statistically significant association between pre-tax profits (both lagged and contemporaneous) with community contributions, and show that all statistically significant associations between individual social performance measures are positive , suggesting that they are mutually reinforcing. The association of size with social performance, noted in the previous paper, is also reinforced. Findings in relation to the proportion of women managers and the number of women on the Board and positive associations with other social and environmental performance measures raise interesting gender issues for business ethics. Factor analysis leads to no clear conclusions but cluster does show two or three clear clusters of firms, where size would seem to be the main but not sole factor. Further areas of research are noted. [source]