On the Association between Current Period Budget Target Achievability and the Properties of Nonfinancial Measures

2016 ◽  
Vol 29 (2) ◽  
pp. 47-62 ◽  
Author(s):  
Jizhang Huang ◽  
Ramji Balakrishnan ◽  
Fei Pan
Keyword(s):  
Performance Metrics ◽  
Incentive Payment ◽  
Positive Interaction ◽  
Financial Measures ◽  
Current Period ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Incentive Contracting ◽  
Future Outcomes

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.

An Empirical Investigation of an Incentive Plan that Includes Nonfinancial Performance Measures

2000 ◽  
Vol 75 (1) ◽  
pp. 65-92 ◽  
Author(s):  
Rajiv D. Banker ◽  
Gordon Potter ◽  
Dhinu Srinivasan
Keyword(s):  
Customer Satisfaction ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Performance Measures ◽  
Financial Measures ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Incentive Plan ◽  
Nonfinancial Performance Measures

Recent studies report an increasing use of nonfinancial measures such as product quality, customer satisfaction, and market share in performance measurement and compensation systems. A growing literature suggests that because current nonfinancial measures are better predictors of long-term financial performance than current financial measures, they help refocus managers on the long-term aspects of their actions. However, little empirical evidence is available on the relation between nonfinancial measures and financial performance, and even less is known about performance impacts of incorporating nonfinancial measures in incentive contracts. Using time-series data for 72 months from 18 hotels managed by a hospitality firm, this study provides empirical evidence on the behavior of nonfinancial measures and their impact on firm performance. The results indicate that nonfinancial measures of customer satisfaction are significantly associated with future financial performance and contain additional information not reflected in the past financial measures. Furthermore, both nonfinancial and financial performance improve following the implementation of an incentive plan that includes nonfinancial performance measures.

The Effect of Positive and Negative Financial and Nonfinancial Performance Measures on Analysts' Recommendations

2012 ◽  
Vol 24 (2) ◽  
pp. 47-64 ◽  
Author(s):  
Dipankar Ghosh ◽  
Anne Wu
Keyword(s):  
Financial Performance ◽  
Performance Measures ◽  
Differential Effect ◽  
Financial Analysts ◽  
Data Availability ◽  
Financial Measures ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Nonfinancial Performance Measures ◽  
Number Of Firms

ABSTRACT This research experimentally examines the favorable/unfavorable outcomes of a firm's financial and nonfinancial performance measures on financial analysts' recommendation to divest or invest in a firm. The participants were financial analysts who made recommendations ranging from “definitely sell” to “hold” to “definitely buy.” The results show that financial and nonfinancial performance measures and their favorableness have an interactive impact on analysts' recommendations. To be precise, the recommendations were very close to the “definitely sell” anchor when the performance was unfavorable, irrespective of whether the measures presented were financial or nonfinancial. Further, favorableness of performance on nonfinancial measures appears to be irrelevant when performance on financial measures is unfavorable. However, when performance on financial measures is favorable, the effect of nonfinancial performance had a differential effect on analysts' recommendations depending on whether these measures indicated favorable or unfavorable performance. Specifically, when nonfinancial performance was unfavorable, the recommendations were closer to “hold” on average, but the recommendations were closer to “definitely buy” on average when nonfinancial performance was favorable. These results are consistent with our expectations. Overall, given that more and more firms are disclosing nonfinancial measures along with the traditional financial measures, and with an increasing number of firms reporting unfavorable financial performance, the results of this research underline the importance of considering both financial and nonfinancial measures and their outcomes—favorable and unfavorable—on analysts' recommendations. Data Availability: Please contact the authors.

Behavioral Effects of Nonfinancial Performance Measures: The Role of Procedural Fairness

2008 ◽  
Vol 20 (2) ◽  
pp. 55-71 ◽  
Author(s):  
Chong M. Lau ◽  
Antony Moser
Keyword(s):  
Performance Measures ◽  
Evaluation Criteria ◽  
Performance Criteria ◽  
Financial Measures ◽  
The United Kingdom ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Employee Behaviors ◽  
Nonfinancial Performance Measures

Recent suggestions that nonfinancial measures are essential to overcome the inadequacies of traditional financial measures have led to the widespread adoption of such measures. It is, however, unclear how employees react to these new measures. This study hypothesizes that favorable employee behaviors will only occur if employees perceive performance evaluation criteria as fair. It is therefore important to ascertain if the use of nonfinancial measures as performance criteria is procedurally fair. Based on a sample of 149 managers from the United Kingdom, the results indicate that the use of nonfinancial performance measures was perceived as procedurally fair. We also find that such perceptions are associated with higher organizational commitment which, in turn, enhances employee job performance.

The Importance of Task Complexity When Rewarding Nonfinancial Performance

2018 ◽  
Vol 31 (2) ◽  
pp. 1-17
Author(s):  
Leslie Berger
Keyword(s):  
Task Complexity ◽  
Important Task ◽  
Complex Task ◽  
Incentive Contract ◽  
Financial Measures ◽  
Nonfinancial Measures ◽  
Nonfinancial Performance ◽  
Task Characteristic ◽  
Measures Of Performance

ABSTRACT In this study, I investigate whether the effectiveness of rewarding performance of nonfinancial measures varies across levels of task complexity. I use a multi-period experiment where participants are assigned a highly or moderately complex task and an incentive contract where only financial measures or both financial and nonfinancial measures are rewarded. I find that in a moderately complex task, individuals perform better when only the financial measures are rewarded in the incentive contract. However, in a highly complex task, individuals perform better when both financial and nonfinancial measures are rewarded. Collectively, the results identify task complexity as an important task characteristic that impacts the effectiveness of incentives on nonfinancial measures of performance.

scholarly journals The Diamond League athletic series: does the air quality sparkle?

2021 ◽  
Author(s):  
James R. Hodgson ◽  
Lee Chapman ◽  
Francis D. Pope
Keyword(s):  
Particulate Matter ◽  
Air Quality ◽  
Performance Metrics ◽  
Urban Air Pollution ◽  
Quality Data ◽  
Performance Variation ◽  
Short And Long Term ◽  
Respiratory Conditions ◽  
Race Performance

AbstractUrban air pollution can have negative short- and long-term impacts on health, including cardiovascular, neurological, immune system and developmental damage. The irritant qualities of pollutants such as ozone (O3), nitrogen dioxide (NO2) and particulate matter (PM) can cause respiratory and cardiovascular distress, which can be heightened during physical activity and particularly so for those with respiratory conditions such as asthma. Previously, research has only examined marathon run outcomes or running under laboratory settings. This study focuses on elite 5-km athletes performing in international events at nine locations. Local meteorological and air quality data are used in conjunction with race performance metrics from the Diamond League Athletics series to determine the extent to which elite competitors are influenced during maximal sustained efforts in real-world conditions. The findings from this study suggest that local meteorological variables (temperature, wind speed and relative humidity) and air quality (ozone and particulate matter) have an impact on athletic performance. Variation between finishing times at different race locations can also be explained by the local meteorology and air quality conditions seen during races.

scholarly journals Long-Term Sustainable Investment for Retirement

2021 ◽  
Vol 13 (9) ◽  
pp. 5000
Author(s):  
Iqbal Owadally ◽  
Jean-René Mwizere ◽  
Neema Kalidas ◽  
Kalyanie Murugesu ◽  
Muhammad Kashif
Keyword(s):  
Mutual Funds ◽  
Performance Metrics ◽  
Retirement Income ◽  
Retirement Plans ◽  
Full Account ◽  
Investment Performance ◽  
Management Fees ◽  
Sustainable Investment ◽  
Managed Funds

We consider whether sustainable investment can deliver performance comparable to conventional investment in investors’ long-term retirement plans. On the capital markets, sustainable investment can be achieved through various instruments and strategies, one of them being investment in mutual funds that subscribe to ESG (environmental, social, and governance) principles. First, we compare the investment performance of ESG funds with matched conventional funds over the period 1994–2020, in Europe and the U.S. We find no significant evidence of differing performance (at 5% level) despite using a number of investment performance metrics. Second, we perform a historical backtest to model a UK personal retirement plan from 2000 till 2020, taking full account of investment management fees and transaction costs. We find that investing in an index-tracker fund overlaid with ESG screening delivers a pension which is 10.4% larger than is achieved if the index-tracker fund is used without screening. This is also 20.2% larger than is achieved by investing in a collection of actively managed funds with a sustainable purpose. We conclude that an ESG-screened long-term passive investment approach for retirement plans is likely to be successful in satisfying the twin objectives of a secure retirement income and of sustainability.

scholarly journals The Moderating Effect of Procedural Justice on the Effectiveness of the Balanced Scorecard in Improving Managerial Performance through Organizational Commitment

2010 ◽  
Vol 12 (3) ◽  
pp. 415
Author(s):  
Supriyadi Supriyadi
Keyword(s):  
Organizational Commitment ◽  
Procedural Justice ◽  
Balanced Scorecard ◽  
Moderating Effect ◽  
Managerial Performance ◽  
Financial Measures ◽  
The Balanced Scorecard ◽  
Nonfinancial Measures ◽  
The Impact ◽  
The Relationship

This study extends prior studies on the effectiveness of theBalanced Scorecard (BSC) to improve managerial performancedone by Lau and Mosser (2008) and Lau and Sholihin (2005).Specifically, the study empirically tests the moderating effects ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and managerial performance. Italso tests the impact of organizational commitment on performance.Based on survey data from 76 respondents, the results indicate thatperceived procedural justice in the use financial and nonfinancialdimensions of the BSC is associated with managers’ organizationalcommitment. It further finds that organizational commitment ispositively related to performance. The study extends the literatureby providing empirical evidence about the moderating effect ofprocedural justice on the relationship between the financial andnonfinancial dimensions of BSC and organizational commitment.Keywords: balanced scorecard; organizational commitment; financial measures;managerial performance; moderating effect; nonfinancial measures;procedural justice

scholarly journals Financial indicators of the sustainability of pastoral farms and their relationship with environmental sustainability

1997 ◽  
pp. 199-204
Author(s):  
Nicola M. Shadbolt ◽  
Stuart D. Morriss ◽  
Terry C. Kelly
Keyword(s):  
Environmental Sustainability ◽  
National Level ◽  
Environmental Indicators ◽  
Financial Indicators ◽  
Financial Health ◽  
Financial Measures ◽  
Preliminary Examination ◽  
Biophysical Indicators ◽  
The Relationship

Agri-environmental indicators developed in New Zealand to date have focused more on environmental and biophysical indicators than on social and financial measures. However, the latter are increasingly seen as pre-requisites to achieving long-term financial and social viability in agriculture. At present environmental costs are internalised in the financial performance of farm businesses because environmental protection in agriculture is funded almost entirely by farmers. This paper presents a preliminary examination of the perceptions of farmers on the relationship between farm financial resources and the environmental effects of farming. It aims to identify pragmatic and reliable financial indicators of sustainable agriculture at both the farm and the regional or national level. The paper will introduce a range of indicators used to measure the financial health of a business and will evaluate them for their ability to measure the economic sustainability of farm businesses over time. Farmer perceptions of the existence of links between the financial and environmental indicators will be explored through analysis of interview responses. Keywords: financial health, sustainability indicators, environmental indicators, financial indicators

scholarly journals A Hydrological Modeling Approach for Assessing the Impacts of Climate Change on Runoff Regimes in Slovakia

Water ◽  
2021 ◽  
Vol 13 (23) ◽  
pp. 3358
Author(s):  
Patrik Sleziak ◽  
Roman Výleta ◽  
Kamila Hlavčová ◽  
Michaela Danáčová ◽  
Milica Aleksić ◽  
...  
Keyword(s):  
Climate Change ◽  
Water Resources ◽  
Hydrological Modeling ◽  
Performance Metrics ◽  
Climate Change Scenarios ◽  
Reference Period ◽  
Changing Climate ◽  
Time Horizons ◽  
The Future

The changing climate is a concern with regard to sustainable water resources. Projections of the runoff in future climate conditions are needed for long-term planning of water resources and flood protection. In this study, we evaluate the possible climate change impacts on the runoff regime in eight selected basins located in the whole territory of Slovakia. The projected runoff in the basins studied for the reference period (1981–2010) and three future time horizons (2011–2040, 2041–2070, and 2071–2100) was simulated using the HBV (Hydrologiska Byråns Vattenbalansavdelning) bucket-type model (the TUW (Technische Universität Wien) model). A calibration strategy based on the selection of the most suitable decade in the observation period for the parameterization of the model was applied. The model was first calibrated using observations, and then was driven by the precipitation and air temperatures projected by the KNMI (Koninklijk Nederlands Meteorologisch Instituut) and MPI (Max Planck Institute) regional climate models (RCM) under the A1B emission scenario. The model’s performance metrics and a visual inspection showed that the simulated runoff using downscaled inputs from both RCM models for the reference period represents the simulated hydrological regimes well. An evaluation of the future, which was performed by considering the representative climate change scenarios, indicated that changes in the long-term runoff’s seasonality and extremality could be expected in the future. In the winter months, the runoff should increase, and decrease in the summer months compared to the reference period. The maximum annual daily runoff could be more extreme for the later time horizons (according to the KNMI scenario for 2071–2100). The results from this study could be useful for policymakers and river basin authorities for the optimum planning and management of water resources under a changing climate.

Cataloging Max Steiner

2021 ◽  
Author(s):  
Jeff Lyon ◽  
Brent Yorgason
Keyword(s):  
Analytical Data ◽  
Film Scores ◽  
Research Project ◽  
Corpus Study ◽  
Main Research ◽  
Brigham Young University ◽  
Future Outcomes ◽  
Character Types

The Max Steiner corpus study is a long-term research project, drawing on the Max Steiner Collection at Brigham Young University, to catalog and analyze the music from all of Steiner’s film scores. This paper outlines the goals, processes, and potential future outcomes of this research. One of the main research goals of this project is to discover what kinds of melodies, harmonies, rhythms, and instruments Steiner used to represent different emotions and character types. Because of the amount of data needed to understand each of these elements thoroughly, this type of analysis can best be done through a corpus study. This data will be published as an interactive database that will allow the user to explore themes as they develop throughout a film as well as discover related themes in other film scores by Steiner. Transcriptions of themes will be displayed with Steiner’s annotations, film stills, and analytical data. This paper presents our findings to date and our plan to analyze, transcribe, and catalog the remaining films.

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