Abstract
This paper reports on an experiment that investigates whether the layout of performance reports affects the leniency and compression of subjective performance evaluations. Relying on psychology theory, we predict that subjective ratings will be higher and more compressed if performance reports contain alphabetically listed indicators rather than categorically listed indicators (as in a balanced scorecard). Moreover, we predict that ratings will be higher and more compressed if performance reports present indicator target and actual values in tables than when this information is presented in graphs. The results from the experiment provide strong support for the hypothesis that performance ratings are lower if measures are listed in a four-category balanced scorecard format as opposed to in alphabetical order. However, there is no support for the other hypotheses. We discuss the implications of the study for accounting research and practice.
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