Non-financial Performance Information Research Articles

THE IMPACT OF ACCOUNTING DISCLOSURE IN THE QUALITY OF FINANCIAL AND NON-FINANCIAL PERFORMANCE

The financial and non-financial performance can be disclosed through the annual reports. Initially before 2007 the non-financial reports were presented by the organisation on demand. The disclosure of nonfinancial reports along with financial reports in the financial statements of the company in the official websites have been started as a good practice to present the overall information about the performance of the organisation. Nonfinancial reporting on environmental challenges, pressure from investors, customers, reputation and trust on the company by the customers, employee wellbeing, competition were specifically asked by the financial institutions or banks to have a better understanding while estimating the reputation of the organisation as specified by Indian Accounting Standards [Ind AS] [1]. The main objectives of the study are to present the exploration on the financial and nonfinancial performances of the organisations in regard with the nation’s political, economic, social conditions, explore the influence of the nonfinancial performance information divulgence affects the financial information of the organisations and To present various financial and nonfinancial information of different organisations with the help of literature review related to the study as a supportive material.

Do non-financial performance and accrual-based cost information affect public sector budgeting?

PurposeThis 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/approachA 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.FindingsWe 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/valueOur 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.

Trading off financial and non-financial performance information to evaluate state-owned enterprise performance – a process tracing-experiment

New public management initiatives have pushed municipal authorities to evaluate state-owned enterprises (SOEs) based on multidimensional performance reports. Little is known, however, about policymakers’ pre-decisional information search and tradeoff processes between different performance dimensions when evaluating SOE performance. We apply a mouse-cursor-tracking experiment with a master students sample and show that participants consider multiple performance dimensions but focus their attention on financial and customer performance information when evaluating SOEs for allocating a budget. We also observe a tradeoff between financial and non-financial performance information in participants’ budget allocations. Finally, we show that participants devote more effort to the performance evaluation process when municipalities’ financial resources are scarce. However, the municipalities’ financial status affects neither the attention paid to financial and non-financial performance nor the budget allocation decisions.

Financial and Non-Financial Disclosure Practices in Selected Awqaf Institutions

It is undeniable fact that waqf becomes as one of tools used in order to alleviate inequality among people especially Muslim community. Basically, waqf fund is raised from the public and managed by mutawalli under waqf institution. As the intermediate party between waqif and beneficiaries, waqf institution is accountable for the management of waqf funds and need to disclose sufficient information pertaining to waqf fund itself. Good disclosure practices by waqf institution should cover both financial and non-financial information for all related waqf activities, programs and projects conducted. This includes such as corporate information, strategic information, financial performance information, financial statement information and non-financial performance information. To examine such disclosure practices, intensive content analysis was employed on waqf reporting information which is waqf annual report from three selected awqaf institutions namely, Perbadanan Wakaf Selangor (PWS), Pusat Wakaf MAIWP Sdn Bhd (PWM) and Majlis Ugama Islam Singapura (MUIS). The results revealed that financial statement information was the highest disclosure practice by selected awqaf institutions when it scores 100% (385 out of 385 items), followed closely by strategic information 68.9% (62 out of 90 items), financial performance information 66.7% (80 out of 120 items), corporate information 61.7% (74 out of 120 items) and finally by non-financial performance information 37.5% (45 out of 120 items). Besides, several interesting and advanced disclosure practice by MUIS also highlighted and discussed as a benchmark for other awqaf institutions to disclose their waqf activities, programs and projects in the future.

Materiality judgments in an integrated reporting setting: The effect of strategic relevance and strategy map

This study reports an experiment conducted to examine auditors' materiality judgments for nonfinancial performance information (NFPI) in the context of Integrated Reporting; a setting where auditors do not have well-established guidelines or benchmarks. We examine two fundamental factors underlying Integrated Reporting that are predicted to influence auditors' NFPI materiality judgments, namely, the level of strategic relevance associated with the NFPI being assessed, and the provision of a strategy map (a visual representation of linkages between the firm's strategic objectives) to auditors. Our study provides evidence that while auditors judge misstated NFPI of low strategic relevance to be less material than misstated NFPI with high strategic relevance, they only make this distinction when a strategy map is present. As integrating a client's strategy in the process of evaluating materiality is important, our result suggests that the presence of a strategy map potentially improves the efficient allocation of assurance resources. The importance of understanding how qualitative factors affect materiality judgments in nonfinancial assurance engagements is reflected in the fact that accounting firms view such assurance as mainstream. Our findings not only have implications for standard setters developing further guidance for determining audit materiality under Integrated Reporting, but also more generally for auditors who are providing assurance services for NFPI.

Charity performance reporting, regulatory approaches and standard-setting

Internationally, there are strong calls for charities’ formal annual reporting to include non-financial performance information. Without the international standards common in other sectors, national accounting standard-setters often regulate charities’ reporting. Lacking evidence on approaches to encouraging/mandating charity performance reporting, and the effectiveness of these approaches, we ask: “How have different jurisdictions responded to calls for increasing performance reporting?”We conduct a benchmarking study that indicates differences in current reporting practices between Australia, New Zealand, the United Kingdom and the United States. By discussing both current regimes and proposed projects, we develop and illustrate a typology of regulatory approaches to performance reporting. These range from command and control, where standard-setters mandate specific performance reporting standards, through to market regulation, where charities and/or sector bodies acting as regulatory entrepreneurs determine what is to be reported. Between these extremes, the typology describes new governance approaches, with standard-setters partnering and collaborating with other actors. These approaches lead to different requirements with potentially significant implications for performance accountability in the respective jurisdictions. We argue that our regulatory typology contributes useful insights for the many jurisdictions grappling with how to regulate their charity sector and encourage performance reporting.

Performance Measurement Information, Job Rotation, Role Stress, and Performance: An Investigation οf Local Government

Budgets in the public sector, especially in local government becomes the starting point for local governments to implement public service. Many strategic decisions relating to the budget that must be taken by public manager for future service improvements. This study raised the issue that the quality of public manager strategic decisions require performance measurement information and role stress in local government. Therefore, the performance of public managers associated with budgeting evaluated in this study. The study was conducted by using experimental methods to obtain evidence of a causal relationship between performance measurement information, job rotation, role stress, and performance of public managers. This study used a Multivariate Analysis of Variance and path analysis as an data analysis. The results showed that lower role ambiguity on public manager who received non-financial and financial performance information than public manager who received non-financial performance information only. Public manager performance was significantly higher at the time experience low role ambiguity. These results support the role theory and contingency theory. However, no evidence was obtained that public managers who received non-financial and financial performance measurement information experience role conflict is lower than the official who received the non-financial performance measurement information or financial information alone. Similarly, about the job rotation. This study did not obtain evidence that role ambiguity and role conflict were lower in the job rotation with high frequency. The results also indicate that role ambiguity is fully mediate the effects of performance measurement information on the performance of local government public managers. However, no evidence was obtained that role conflict mediates the influence of performance measurement information on the performance of public managers. Other results showed that role ambiguity and role conflict did not mediate the association with the job rotation and performance. Keyword: financial and non-financial performance information, job rotation, performance measurement, role stress.

The accountability information needs of key charity funders

Government and philanthropic funders are key charity stakeholders, yet we know little about their accountability information needs. This New Zealand study captures these stakeholders’ perceptions of the background, financial and non-financial performance information they need from charities. It also reveals how, in addition to imposing reporting requirements, these key funders engage in ‘institutional work’ to ensure they receive appropriate accountability information.

Is Mandatory Nonfinancial Performance Measurement Beneficial?

We use value of information theory and examine the effect of regulation requiring mandatory measurement and peer disclosure of nonfinancial performance information in the hospital industry. We posit that mandatory nonfinancial performance measurement has an information effect and a referent performance effect. The information (referent performance) effect arises because the new performance signals induce more precise posterior beliefs about individual (relative) performance. Using panel data from the Japanese National Hospital Organization, we analyze performance improvements following regulation requiring standardized measurement and peer disclosure of absolute and relative patient satisfaction performance. After controlling for ceiling effects, bounded dependent variables, and regression to the mean, results show that mandatory nonfinancial performance information measurement and peer disclosure improves overall performance (information effect) with larger improvements for poorly performing hospitals (referent performance effect). These effects are found even in the absence of any compensation-based incentives to improve performance.

Financial analysts' evaluation of enhanced disclosure of non-financial performance indicators

This study examines whether enhanced disclosure of non-financial performance indicators influences financial analysts’ decision processes and the information they pay attention to when performing stock-price valuations. These questions are addressed through a verbal protocol study that examines the information-processing behaviours and types of information used by analysts in valuing companies. The protocol analysis provides a detailed, descriptive analysis of the use of non-financial performance indicators in this task. The results demonstrate considerable attention to non-financial performance indicators. However, that attention was asymmetric depending on the trend-direction of the financial information. Financial information received greater attention when the trend was negative whereas non-financial performance indicators received greater attention when the financial information showed positive trends. Overall, these results elucidate the processes by which analysts utilise non-financial performance information in making valuation and subsequent investment decisions.

Corporate Governance and Environmental Performance: Industry and Country Effects

Portfolio investment managers and institutional investor clients are becoming more sensitive to the investment risks and opportunities that corporate governance and corporate environmental performance pose because of the growth in understanding of their potential financial repercussions. However, while both corporate governance and corporate environmental performance are increasingly examined within the financial marketplace, there is very limited empirical research that examines them together. In this paper, an empirical analysis utilizing proprietary quantitative data from two non-financial rating agencies is conducted in order to develop an understanding of the relationship between these two types of corporate performance, their causes, and their consequences. The findings of this paper do not suggest that there is a direct correlation between corporate governance and environmental performance. However, it is established that each has been improving over time, and that a convergence in standards is occurring between poor and strong performing firms. Perhaps the most salient finding of this research is that both the corporate governance and corporate environmental performance share a common predictor - disclosure. The discovery of a significant relationship between disclosure and performance is very important as it suggests that when a firm discloses non-financial performance information, actors within the firm become increasingly concerned with managing those revealed areas. Therefore, global standards of corporate governance and environmental performance are likely to be improved by of the recent explosion in demand for disclosure by institutional investors in these areas.

Forecasting and reporting performance: the search for the holy grail?

More than 500 public entities in New Zealand are required to publicly report prospective and actual performance information. Most of the requirements have been in place for more than 15 years, their origins lying in the public sector reforms of the 1980s. There is strong theoretical logic supporting the usefulness of publicly disclosed performance information, with disclosure of non-financial performance information a growing phenomenon internationally. Indeed, last year I attended an international gathering of auditors-general at which it was clear that the demand for such information is growing.

Impact of Management Accounting Information and AMT on Organizational Performance

This study empirically examined and identified specific types of management accounting information as well as conditions of learning facilitators for effective organizational learning under high levels of advanced manufacturing technology (AMT). In this study, the interaction and communication among functions as well as job rotation and experience were considered as the facilitators of organizational learning. This research investigated the relationship between the level of AMT and the amount of management accounting information (i.e. planning and control information and nonfinancial performance information). The empirical results showed that there is a significant positive relationship between the AMT level and the amount of information produced by management accounting information systems (MAISs). Significant positive correlations among the amount of information, degree of organizational learning, and production performance were also observed. Using structural equation modeling, this study examined causal relationships among AMT level, amount of information, learning facilitators, organizational learning, and production performance. The results of the study showed that under a high level of AMT, to give rise to a high degree of learning and, consequently, an increase of performance through the provision of information, facilitators of learning must be well-coordinated (i.e. highly utilized), and MAISs must produce a large amount of management accounting information (i.e. planning and control information and nonfinancial performance information).

The relationships among management accounting information, organizational learning and production performance

This study adopted the organizational learning perspective to examine relevant types of management accounting information required by advanced manufacturing technology (AMT) for attaining improved production performance. First, we investigated the relationship between the level of AMT usage and the amount of information provided by management accounting information systems (MAISs). The results of this study showed a positive correlation between the AMT level and the amount of management accounting information (i.e. planning and control information, and nonfinancial performance information). A significant positive relationship between provision of information and improvement in production performance was also observed. This study also empirically examined the learning promoting effects of organizational facilitators, which is complemented and assisted by information technology. The empirical results demonstrated that facilitators of organizational learning have a moderating impact on the relationship between provision of information and performance improvement. Therefore, it is concluded that when learning facilitators are well arranged and highly utilized, a provision of information is more likely to be linked to effective learning and, consequently, improved performance.

Recommendations on Disclosure of Nonfinancial Performance Measures

Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Twitter LinkedIn Tools Icon Tools Get Permissions Cite Icon Cite Search Site Citation Laureen A. Maines, Eli Bartov, Patricia M. Fairfield, D. Eric Hirst, Teresa E. Iannaconi, Russell Mallett, Catherine M. Schrand, Douglas J. Skinner, Linda Vincent; Recommendations on Disclosure of Nonfinancial Performance Measures. Accounting Horizons 1 December 2002; 16 (4): 353–362. doi: https://doi.org/10.2308/acch.2002.16.4.353 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu nav search search input Search input auto suggest Search

A comparative empirical examination of extent of disclosure by private and public colleges and universities in the United States

This study examines the annual reports of 100 United States (US) institutions of higher education to determine identifiable and measurable factors associated with extent of disclosure. Each disclosure was weighted by its relative importance to users of college and university financial statements. The measurement construct for extent of disclosure was the ratio of an institution’s total disclosure score to its total possible disclosure score. Institution size and public/private status were associated with total extent of disclosure but leverage and audit firm size were not significant. Extent of disclosure of non-financial performance information (service efforts and accomplishments) was associated with high tuition rates and low dependence on tuition revenue and with state auditors as opposed to public accounting firm auditors. The findings are consistent with accountability and public interest tenets (Coy, D., Fischer, M., Gordon, T., 2001. Public accountability: a new paradigm for college and university annual reports. Critical Perspectives on Accounting 12 (1), 1–31). Highly visible institutions, those larger in size or audited by the state, disclosed more information. Moreover, some institutions used a corporate-style report to better promote their interests.

The organisational learning effects of management accounting information under advanced manufacturing technology

This study empirically examined the organisational learning effects of the nonfinancial performance information provided by management accounting information systems (MAISs) under advanced manufacturing technology (AMT). In this study, a target costing system and the frequent and quick reporting of information were considered the facilitators of learning. First, we examined the relationships between AMT level and the amount of nonfinancial performance information produced by MAISs. The empirical results showed that there are significant positive relationships between the level of AMT and nonfinancial performance information. With a systems approach, we also proved the impact of the relationships among AMT levels, nonfinancial performance information and learning facilitators on the organisational performance of a firm. The results of our research suggest that under a high level of AMT, for the provision of information to result in an increase of performance through organisational learning, a target costing system must be introduced and a large amount of information should be provided frequently and quickly. The results of this study also showed that although AMT level may be low, fairly well-arranged facilitators and a moderately large amount of information may be necessary for the improvement of performance. In conclusion, effective organisational learning depends on the provision of relevant information as well as efficient learning support mechanisms.

Should Non-Financial Performance Information be Audited? The Case of Public Service Agreements in UK Government

Should Non-Financial Performance Information be Audited? The Case of Public Service Agreements in UK Government

The New Business of Government Budgeting: Reporting Non-Financial Performance Information in Victoria

The New Business of Government Budgeting: Reporting Non-Financial Performance Information in Victoria

Should Non‐Financial Performance Information be Audited? The Case ofPublic Service Agreements in UK Government

A growing level of controversy surrounds the right of the UK National Audit Office (NAO) to audit public service agreements (PSAs) – documents which detail the performance, against targets, of central government departments. The NAO has not been granted a statutory role, although an independent official review of accountability and audit in UK central government has recently concluded that the external validation of departmental information systems is a crucial first step towards validation of key published data. In the context of growing academic concern over the scale and achievements of (public) audit, it is pertinent to ask whether such a potential extension in the rights and scope of the NAO's audit work is necessary or likely to enhance public accountability and improve the performance of government departments and audit bodies.