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Presentation Formats, Performance Outcomes, and Implications for Performance Evaluations

Lasse Mertins, Lourdes Ferreira White

Advances in Management Accounting

ISBN: 978-1-78441-652-2, eISBN: 978-1-78441-651-5

Publication date: 29 March 2016

Abstract

Purpose

This study examines the impact of different Balanced Scorecard (BSC) formats (table, graph without summary measure, graph with a summary measure) on various decision outcomes: performance ratings, perceived informativeness, and decision efficiency.

Methodology/approach

Using an original case developed by the researchers, a total of 135 individuals participated in the experiment and rated the performance of carwash managers in two different scenarios: one manager excelled financially but failed to meet targets for all other three BSC perspectives and the other manager had the opposite results.

Findings

The evaluators rated managerial performance significantly lower in the graph format compared to a table presentation of the BSC. Performance ratings were significantly higher for the scenario where the manager failed to meet only financial perspective targets but exceeded targets for all other nonfinancial BSC perspectives, contrary to the usual predictions based on the financial measure bias. The evaluators reported that informativeness of the BSC was highest in the table or graph without summary measure formats, and, surprisingly, adding a summary measure to the graph format significantly reduced perceived informativeness compared to the table format. Decision efficiency was better for the graph formats (with or without summary measure) than for the table format.

Originality/value

Ours is the first study to compare tables, graphs with and without a summary measure in the context of managerial performance evaluations and to examine their impact on ratings, informativeness, and efficiency. We developed an original case to test the boundaries of the financial measure bias.

Keywords

Citation

Mertins, L. and White, L.F. (2016), "Presentation Formats, Performance Outcomes, and Implications for Performance Evaluations", Advances in Management Accounting (Advances in Management Accounting, Vol. 26), Emerald Group Publishing Limited, Leeds, pp. 1-34. https://doi.org/10.1108/S1474-787120150000026001

Publisher

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Emerald Group Publishing Limited