Publications
Publications
- Fall 2013
- Contemporary Accounting Research
The Role of Performance Measures in the Intertemporal Decisions of Business Unit Managers
Abstract
Accounting performance measures are often argued to lead to short-sighted behavior by managers facing intertemporal decisions. We assess the association between different types of performance measures and the time horizon of business unit managers who have profit responsibility. Our results, based on a sample of 105 managers, indicate that accounting return measures direct business unit managers' attention toward longer-term activities. Non-financial measures similarly direct managerial attention toward longer-term activities, although not to the same degree as accounting return measures. We conclude that accounting return measures can balance out potential congruity problems associated with the profit measures by directing managerial attention to activities that have longer-term consequences on firm performance.
Keywords
Citation
Bouwens, Jan, Margaret A. Abernethy, and Laurence van Lent. "The Role of Performance Measures in the Intertemporal Decisions of Business Unit Managers." Contemporary Accounting Research 30, no. 3 (Fall 2013): 925–961.