Non-financial Performance Measures Research Articles

ENVIRONMENTAL MANAGEMENT ACCOUNTING AND OPERATING PERFORMANCE OF LISTED OIL COMPANIES: A LONGITUDINAL STUDY IN AN EMERGING ECONOMY

This research examines the correlation between the implementation of EMA and the operating performance of Nigerian oil companies on the stock exchange for the year 2014-2023. The study assesses the level of implementation of the EMA practices in these companies and analyses the changes in its financial and non-financial performance measures. This study employed longitudinal and ex-post facto research designs, secondary data were collected from the annual reports and financial statements of the listed oil companies in Nigeria. Data collected were analysed using both descriptive and inferential statistics, which include panel data regression analysis to measure the significance and direction of the relationship among these variables. We employed both fixed and random effects models to determine the relationship between EMA, LEV, SIZE, and performance indicators. The results show that, although awareness exists on the role of environmental management accounting for the Nigerian oil industry, there is still limited application and implementation in corporate strategies. Further, the results show that EMA does not exert immediate significant impact of financial performance of Nigerian firms, especially in sectors like oil where traditional operations are deeply embedded. The concluded that while EMA practices are essential for long-term sustainability, their immediate financial benefits may be limited, especially in the context of the Nigerian oil industry. As the Nigerian oil sector continues to evolve, future studies could explore the longer-term effects of EMA adoption and the changing role of market forces in driving sustainability efforts.

Earnings management in state-owned enterprises in Indonesia

This research aims to examine the effect of bonus contracts that use financial and non-financial performance measures and examine the impact of implementing AKHLAK culture on earnings management in state-owned enterprises. In addition, this research aims to evaluate the effectiveness of implementing GCG in mitigating earnings management behaviour. To achieve the objectives of this research, we used a sample of 32 state-owned companies from 2017 to 2022 with a total of 178 data points. The analysis uses path examination to measure the influence between variables. We have found that Chief Executive Officer (CEO) career and culture negatively influence earnings management, whereas bonuses have no effect. We have also found that GCG moderates bonuses on earnings management but does not moderate CEO career and culture on earnings management. These findings have demonstrated that CEO bonus contracts based on financial and non-financial performance measures do not motivate CEOs to manage accrual earnings. The results of this research provide input for the government to increase the implementation of AKHLAK culture and appoint career directors in state-owned companies. The results of this research also provide empirical evidence that giving bonuses does not affect earnings management behaviour of the bonus contract is based on financial and non-financial performance. The results of this research are expected to provide advice to shareholders on how to use financial and non-financial measures in bonus contracts simultaneously.

CEO Compensation Contracts in Family Versus Nonfamily Firms: The Use of Nonfinancial Performance Measures

ABSTRACTResearch Question/IssueThis study examines the association between ownership type—family versus nonfamily firms—and CEO family status—family CEO versus professional CEO—and the use of nonfinancial performance measures (NFPMs) in CEO compensation contracts.Research Findings/InsightsUsing a sample of 3143 firm‐year observations of S&P 500 nonfinancial firms from 2010 to 2018, we find that family firms place a significantly lower weight on NFPMs in CEO compensation contracts than nonfamily firms. Within family firms, we find that a significantly lower weight is placed on NFPMs in compensation contracts for family CEOs relative to those for professional CEOs. Furthermore, additional tests indicate that the negative association between family ownership and the weight placed on NFPMs is stronger (weaker) in firms with low (high) stakeholder visibility.Theoretical ImplicationsWe advance the academic literature on the selection of performance measures in compensation contracts by providing insight into the implications of family ownership and of a CEO's family ties for the use of NFPMs. The results suggest that because family firms have a good ability and a strong incentive to directly monitor and control their CEO's actions, NFPMs are less needed in CEO compensation contracts as a means to align goals. Furthermore, the effects we document are even stronger when the CEOs of family firms are family members.Practitioner/Policy ImplicationsThe results imply that while family firms may not need a high weight on NFPMs in CEO compensation contracts to monitor their CEOs' actions, goal alignment, and internal communication of nonfinancial targets, they may still need them for communication and signaling purposes when exposed to external stakeholder monitoring.

A comparison of the usage between financial and non-financial performance metrics in Small and Medium Enterprises (SMEs) in South Africa

The purpose of this study is to explore the performance measurement approach of small and medium enterprises (SMEs) in the South Durban region of South Africa. It has long been known that small and medium enterprises (SMEs) play an important role in economic growth and income distribution in the world's major economies. However, due to globalisation, the fourth industrial revolution and increased competition from multinationals, South African SMEs face new challenges in measuring their performance. To respond to these challenges, SMEs must adopt efficient and effective performance measurement models. However, currently, according to the researchers, there is no such performance measurement framework. This study aims, among others, to close this gap in the literature. This study uses a deductive, positivist research design to comprehensively explore performance measurement practices in small and medium enterprises (SMEs) in a given region. Based on Morgan's sample size table, size 217 was chosen. The use of financial and non-financial performance measures is preferred by SMEs as it shows better performance compared to only one measure. In addition, the study found a positive correlation between business size and age, indicating that larger businesses tend to be older.The results of this study help to understand the complex relationship between job dimensions, age, and performance, highlighting the importance of choosing appropriate performance measures. Future research is recommended to gain a deeper understanding of these relationships and how they vary across contexts and sectors.

Enhancing Construction Performance: A Critical Review of Performance Measurement Practices at the Project Level

The construction industry faces significant challenges in measuring and assessing performance effectively. Conventional methods of measuring construction performance have become less effective, prompting a need to adopt non-financial performance measurements. This shift acknowledges the shortcomings of relying solely on financial performance measurement systems. As a result, there has been a substantial increase in research and focus on non-financial performance measurement systems in recent decades. This study focuses on analyzing performance measurement practices and key performance indicators (KPIs) in the construction industry, specifically at the project level. By examining 146 relevant articles, the study offers a thorough overview of various aspects of project performance. In addition to the traditional dimensions of the project management triangle (cost, time, and quality performance), the study emphasizes the importance of considering other dimensions. These include stakeholder performance, safety performance, technology utilization performance, value performance, environmental impact performance, and the application of maturity models. By incorporating these additional KPIs, a more comprehensive and holistic evaluation of project performance can be achieved. This study’s findings make notable contributions to the methodological framework of performance measurement in construction projects. By consolidating diverse research sources, the study offers valuable guidance for future research in the field of project performance. Moreover, it provides insights into selecting suitable performance measurement methods, empowering practitioners to effectively assess and manage project performance.

Management Accounting Research Opportunities in Climate Change Reporting

ABSTRACT Climate risk is a critically important challenge for society. Current accounting-related efforts include initiatives by regulators to promulgate climate risk disclosure standards, focusing on disclosure of nonfinancial and forward-looking information. These proposals are certain to evolve over time. With management accounting research’s focus on decision-making and performance evaluation using nonfinancial performance measures and effective management control systems, management accounting researchers are in a strong position to provide unique input into the ongoing development of these reporting standards. In this commentary, we discuss topics where management accounting researchers can contribute to the standard-setting efforts. Contributing to these efforts requires a change in mindset for management accounting researchers from primarily focusing on internal and potentially idiosyncratic decision-makers to a broader audience that includes external providers of capital. However, the reward to doing so is participation in interesting and important research avenues that can have a real impact on society. JEL Classifications: M49; M48; M14.

The Integral Role of Accounting in Organizational Dynamics and Decision-Making

Purpose: The purpose of this research is to explore the integral role of accounting in organizational dynamics and decision-making processes. Research Design and Methodology: The study employs qualitative research methodology, conducting a systematic review of literature. The research design involves structured searches across academic databases and online repositories, utilizing predefined search terms and inclusion criteria. The primary data collection method is the systematic review of literature, supplemented by citation chaining and reference list scanning to enhance the breadth and depth of the literature review. Findings and Discussion: The findings reveal that accounting plays multifaceted roles in organizational dynamics, including financial management, governance, risk management, and strategic decision-making. Transparent and reliable financial reporting serves as a foundation for stakeholders to assess organizational performance and make informed decisions. Integration of non-financial performance measures alongside financial metrics enhances decision-making effectiveness and strategic alignment. Implications: The study underscores the importance of continuous adaptation and innovation in accounting practices to navigate evolving business environments successfully. Moreover, technological advancements, globalization, and regulatory reforms significantly impact accounting practices and organizational dynamics, presenting both opportunities and challenges.

The Effects of Governance Practices on the Performance of the Sri Lankan Public Sector Development Projects

The use of Project Governance Practices (PGPs) is increasingly taking a substantial stage in developing economies, particularly in a newly industrializing nation like Sri Lanka where public sector development projects have been implemented to expedite the nation's growth and prosperity. As it is essential to lay a transparent and tangible foundation for an effective public sector that can be sustained, the paper focuses on the significance of PGPs in enhancing the performance of the Sri Lankan public sector development initiatives. Structuring, normalizing, facilitating, and post-conflict-sensitive variables were used to measure the PGPs, whereas financial and non-financial performance measures were employed to evaluate the project performance. The researcher conducted direct observations and administered a comprehensive Likert-scaled questionnaire to 518 project administrators involved in various Sri Lankan public sector development projects, specifically focusing on projects related to irrigation, roads and highways, water and sanitation, and other infrastructure developmental projects. The data was analyzed using the structural equation modeling through the AMOS software. The results showed that PGPs created a considerable improvement in project performance, which increased support for expanding economic prosperity through balanced development strategies and sustainability-based policy formation.
 Keywords: Performance, Project governance practices, Public sector development projects, Sri Lanka

Analysis of The Balanced Scorecard Approach For Assessing The Financial and Non-Financial Performance Measurement

Analysis of The Balanced Scorecard Approach For Assessing The Financial and Non-Financial Performance Measurement

Characteristics and Performance of Family Businesses in Wuse Market, Abuja, FCT Nigeria

The unprecedented uncertainties in the Nigerian business environment is negatively impacting business operations and performance. Yet, literature on the association between business characteristics and the financial and non-financial performance of family trading businesses in the Nigerian context is overtly and seemingly scant. Again, family trading businesses are prevalent in Wuse market; one of the largest markets in Abuja, FCT. Taken together, this study seeks to investigate the effects of business characteristics on the financial and non-financial performance of family trading businesses in the market. A cross-sectional survey research design, and criterion and systematic sampling techniques were adopted to collect data from 211 founder/CEOs and the descendant/CEOs of family trading businesses in the market via questionnaire. The generated data were subjected to linear regression analysis. The results showed positive and significant effects. The study concludes that the computation of the overall performance of the businesses based on financial and non-financial performance measures show higher overall performance than when they are computed using financial performance measures alone. Education of the founder/CEOs and descendant/CEOs on how to keep financial records of business transactions, collect the non-financial data based on the non-financial performance measures, and how to use same for the computation of non-financial performance were recommended. The researcher advocates a replication of the study in other contexts using an expanded scope and qualitative or triangulation method.

A systematic literature review of startup survival and future research agenda

PurposeThis paper aims to provide a brief review of the work on startup survival and a conceptual framework of factors influencing a startup firm’s survival. In addition, it lists significant gaps and recommends avenues for future research.Design/methodology/approachThis paper conducted a systematic literature review of peer-reviewed journal articles indexed in Scopus, Web of Science and EBSCO databases using Preferred Reporting Items for Systematic Reviews and Meta-Analyses guidelines. A total of 140 articles published in 72 journals between 1993 and 2021 were considered for the review.FindingsThe comprehensive review revealed that most of the studies have applied a single theoretical lens and have taken place in advanced economies, with a narrow focus on emerging economies. Empirical research has prominently applied regression-based models to analyse the relationship between the antecedents and the outcomes. Internal resources such as human capital, financial capital and physical capital and non-financial performance measures such as survival, growth and employment are the studies’ prominently used antecedents and outcome variables. However, a limited number of studies have used mechanisms of mediation and moderation.Originality/valueDespite the substantial scientific and practical discussion on startup survival, to the best of the authors’ knowledge, no comprehensive review has been undertaken to date, which provides a systematic and comprehensive compilation of the knowledge on the topic. This study aims to develop a unique landscape of scientific advancement by methodically reviewing, categorising and synthesising the current body of knowledge on the topic.

Linking Performance Measures and Feedback: Self-Regulation for Creativity

ABSTRACT This study examines the proactive feedback effect of non-financial performance measures (NFPMs) and the passive feedback effect of financial performance measures (FPMs) on feedback-seeking behavior, perceived feedback quality, and individual creativity. Using a sample of survey data collected from middle-level managers in Australia, this study finds that managers passively receive performance information and perceive high-quality feedback when their performance is evaluated based on FPMs and that they proactively seek feedback when their performance is evaluated based on NFPMs. The results of the study also show that neither NFPMs nor FPMs are directly associated with individual creativity. However, the study finds that (1) the positive association between NFPMs and individual creativity is fully mediated by feedback-seeking behavior and perceived feedback quality together, and (2) the positive association between FPMs and individual creativity is fully mediated by perceived feedback quality alone. Further, the results indicate that feedback-seeking is not only a catalyst for perceived feedback quality but also a self-regulation strategy that facilitates individual creativity. In sum, the study offers initial empirical evidence of the passive feedback effect of FPMs and the proactive feedback effect of NFPMs on feedback and individual creativity.

The effect of nonfinancial performance measures, absorptive capacity, and organizational learning on innovation performance

The effect of nonfinancial performance measures, absorptive capacity, and organizational learning on innovation performance

A review on financial and non-financial measures of supply chain performance

This study ascertains the pertinent measures and metrics of supply chain performance through an extensive literature review. A total of 53 international peer-reviewed journal articles published between 2012-2021 were retrieved from Scopus, Emerald insight, Elsevier and Springer databases for review. The articles reviewed were selected and categorised based on the approach, scope and contribution in assessing and ascertaining the measures and metrics of supply chain performance. Limited to the review of literature, this study provides a benchmark and approaches for ascertaining the level of supply chain performance from financial and nonfinancial perspectives. Throughout the review, the study found inventory turnover ratio, supply chain and logistics costs and cash flows reflected in terms of ROI, ROE, ROA, profit margin, working capital and assets as the prime financial measures of supply chain performance. Moreover, the study found customer satisfaction, delivery performance, quality services, enhanced relationships and competitive advantages as the key non-financial measures of supply chain performance. The study concludes and recommends the financial and non-financial measures as the appropriate approaches for ascertaining the level of supply chain performance. In order to appropriately ascertain the level of supply chain performance, performance measurement should be accounted for by all actors at each node of the supply chain, using the same approach, measures and metrics. Additionally, further studies are required to address the benefits and issues that impede supply chain performance and measurements across different sectors of the economy.

Customers’ perception of telecommunication businesses: Non-financial performance measures in organizational success

Performance measures drive an organization’s success. The measures improve strategic communication with stakeholders. Based on customer survey data, this study aimed to examine the association between the use of non-financial performance measures (NPMs) and organizational success (OS) in the Nepalese telecommunication business. The study used a descriptive strategy and a structured survey questionnaire to collect data from the targeted respondents. It gathered 385 responses based on the convenience sampling technique. The questionnaire contained two items relating to the respondent’s demographics, 19 items relating to NPMs, and seven items on organizational success. The NPMs were grouped into three constructs by employing confirmatory factor analysis. The analysis indicated that the technological and innovation performance measures had the most significant contribution, followed by the social and environmental performance measures and the customers’ performance measures to the organizational success. The study found that NPMs explained 62.9% of telecommunication business’s success, indicating more reliance on NPMs increases performance and success. Such findings would provide crucial information for comprehending the NPMs and validate Adhikari and Chalise’s (2021) conclusions that the performance evaluation system for the Nepalese telecommunications business has changed to reflect strategic goals by adding NPMs.

Customer’s perspective on non-financial performance metrics of telecommunication companies: The emerging market case

Organizational performance monitoring and management are crucial in today’s fast-paced corporate world. Performance metrics show how much an organization improves. The study’s objective was to quantify the non-financial performance metrics (NPMs) in the telecommunication business performance from the customers’ perspective. The method of quantitative research and standardized questionnaire was used to obtain primary data from Nepal’s renowned and the largest telecommunication corporation cell phone subscriber. The questionnaire contained three general demographics-related inquiries and 32 non-financial performance metrics on a 6-point Likert-type scale. The study gathered a total of 389 responses using a convenience sampling technique. The findings revealed that non-financial performance metrics contributed to around 54% of the success and capabilities of Nepalese telecommunications enterprises. The study resulted in the development of a reliable and valid instrument for measuring the performance of the emerging market for telecommunications services using non-financial performance criteria. The study confirmed Adhikari and Chalise’s (2021) conclusions that the Nepalese telecommunication industry’s performance assessment has been a significant managerial instrument, evolving to reflect strategic aims by including non-financial performance criteria. Non-financial performance measurements help the company integrate its business performance with its strategy, enhancing market success.

FINANCIAL REPORTING QUALITY AND CORPORATE PERFORMANCE OF BUSINESS ORGANIZATIONS IN NIGERIA

Evidence from previous studies revealed that quality of financial reporting has effect on firms’ performance by placing more emphasis on the financial measures of corporate performance with little emphasis on the non-financial measures. Therefore, this study appraises the impact of financial reporting quality on performance using both the financial and non-financial measures of corporate performance. This study focuses on the listed manufacturing companies in Nigeria. Data were sourced primarily and secondarily with the use of questionnaires and annual reports of the selected companies from the periods of 2017 to 2021 respectively. The information supplied in annual reports and the questionnaires were then analyzed distinctively by the use of multiple regression analysis. The result showed that financial reporting has an impact on both financial and non-financial performance of corporate entities in Nigeria. Hence, it recommended that companies should ensure to give credible and equal reports on both the financial and non-financial performance of their businesses.

The moderating role of ESG disclosure scores in determining the impact of firm performance on CEO pay: a dynamic panel approach

This paper aims to empirically examine the moderating role of ESG disclosure while determining performance-based CEO pay. The compensation pay given to the CEOs must be linked to corporate sustainability so as to motivate them to act towards non-economic goals vis-à-vis earning profits. A total of 67 companies listed in the NSE Nifty 100 ESG index spanning six years from 2014 to 2019 have been taken as the panel data sample. As a baseline methodology, the PCSE model is applied and further two-step system GMM model has been considered for robustness check. The findings reveal that ESG disclosure scores show a significant positive effect in moderating the CEO pay-performance relationship. Stand-alone ESG measures indicate that except for social disclosure scores, all the other indicators depict a significant impact in determining the effect of firm performance on CEO pay. This study implies consideration of non-financial performance measures while determining CEO Pay.

Investigating the effects of the COVID-19 pandemic on medical device strategy and firm performance

The object of study is the importance of medical technology and healthcare delivery in the COVID-19 pandemic. The COVID-19 pandemic has caused many changes to the business, healthcare, and societal landscape. The changes have had varying effects on key industries, demanding them to realign to fit new pandemic-imposed environmental conditions. This study seeks to investigate the effects of the COVID-19 pandemic on medical device strategy and firm performance of company X, and to provide recommendations and insights on strategies to ensure continuity post-pandemic. A qualitative analysis of the results from nine interviews with associates regarding the effects of COVID-19 on firm performance and strategy at company X was explored. The findings from a thematic analysis of the interview data are reported and related to the study's research objectives. Findings showed that the COVID-19 pandemic forced company X to adjust its strategy to align it with the changing environment. However, the data showed that the unknown nature and uncertainty of the COVID-19 pandemic environment meant that the realignment of strategy to the prevailing dynamics was unique. This study's key findings indicate that COVID-19 strongly influenced financial performance, which influenced firm performance significantly. In addition, financial performance measures were found to have more impact than non-financial performance measures such as strategic performance. The main recommendation emanating from the study was to improve the organization’s agility, versatility, and speed. This would be achieved through simplifying processes, streamlining decision-making, and enhancing speed in the market. Agility and versatility are necessary to overcome or take advantage of new developments from the pandemic and post-pandemic environment. This research study can assist medical enterprises in other countries to stream their services and align strategy to meet the dynamic environment caused by the COVID-19.

ESG performance measures for executive pay: Delphi inquiry strategy and experts’ opinion

Orientation: Rising levels of executive compensation amidst the widening inequality, unemployment, poverty and other socio-economic challenges have raised questions among policymakers, academics and practitioners alike on the best ways to resolve this conundrum.Research purpose: The main objective of this study was to identify a composite mix of environmental, social and governance (ESG) indicators that can be used in executive compensation plans.Motivation for the study: Whereas the importance of incorporating the ESG in executive compensation plans is well documented, it is not known which indicators are appropriate and can be used in the South African context.Research design, approach and method: A sequential exploratory research design was used in this study. The ESG-based indicators were identified from the literature and then subjected to three rounds of surveys in a Delphi enquiry strategy.Main findings: An eclectic mix of nonfinancial performance measures (NFPMs) based on the ESG philosophy were identified, confirmed and validated by a diverse team of international experts.Practical/managerial implications: In order to curb rising executive compensation and to disincentivise short-termism associated with sole reliance on profits as the only yardstick for performance, NFPMs identified in this study should be integrated into the executive compensation designs.Contribution/value-add: On an empirical front, the study proffers novel NFPMs for executive compensation plans that are predicated on ESG philosophy. The methodological contribution lies in the use of a Delphi inquiry strategy, which has never been used in the area of executive compensation.