Causality in a Performance Measurement Model: A Case Study in a Brazilian Power Distribution Company

STUDIES IN MANAGERIAL AND FINANCIAL ACCOUNTING - PERFORMANCE MEASUREMENT AND MANAGEMENT CONTROL: MEASURING AND REWARDING PERFORMANCE, Marc J. Epstein, Jean-François Manzoni, eds., Vol. 18, No. 1, pp. 273-299, Bingley, UK: Emerald Group Publishing Limited, 2008

Posted: 21 Aug 2007 Last revised: 19 Nov 2008

See all articles by Andre C. B. Aquino

Andre C. B. Aquino

University of Sao Paulo - FEARP-USP

Ricardo Lopes Cardoso

Brazilian School of Public and Business Administration; Rio de Janeiro State Univ., FAF

Valeria Lobo A. Boya

FUCAPE Business School

Marcelo S. Pagliarussi

School of Economics, Business Administration and Accounting at Ribeirao Preto (FEA-RP/USP)

Date Written: January 2008

Abstract

This study extends prior balanced scorecard research by incorporating the effects of uncertainty, payment schemes and the strength of causal relations proposed in the performance measurement model (PMM) on the budgetary dynamics. Our analysis was restricted to two strategic business units, engineering projects and electricity distribution service, from a Brazilian electric power concessionaire. We postulate a mediated moderation association between uncertainty (treatment), bonus scheme (mediator), dispersion of payment scheme and the strength of causal relations proposed in the PMM (moderators) on budgetary slack (outcome). Additionally, we postulate that the use of accounting based measures also mediates the effect of uncertainty on budgetary slack. We gathered monthly observations from 102 indicators containing the target and achievement values throughout 2002-2006. Managers were later asked to answer questionnaires about the possible cause-effect relations between these indicators, then 215 causal maps of the department and corporate indicators were drawn up. Econometric analysis provided evidence that the budgetary slack observed is directly impacted by uncertainty, and this impact is moderated by the dispersion of payment scheme. However, we did not find any evidence that supported the mediation process proposed between uncertainty, accounting-based measures and budgetary slack. Incomplete implementation of balanced scorecard and the level of analysis adopted are possible explanations for that.

Keywords: performance measurement, balanced scorecard, incentives, goals, field study

JEL Classification: L21, M41, M10

Suggested Citation

Aquino, Andre C. B. and Cardoso, Ricardo Lopes and Boya, Valeria Lobo A. and Pagliarussi, Marcelo S., Causality in a Performance Measurement Model: A Case Study in a Brazilian Power Distribution Company (January 2008). STUDIES IN MANAGERIAL AND FINANCIAL ACCOUNTING - PERFORMANCE MEASUREMENT AND MANAGEMENT CONTROL: MEASURING AND REWARDING PERFORMANCE, Marc J. Epstein, Jean-François Manzoni, eds., Vol. 18, No. 1, pp. 273-299, Bingley, UK: Emerald Group Publishing Limited, 2008. Available at SSRN: https://ssrn.com/abstract=1007793

Andre C. B. Aquino (Contact Author)

University of Sao Paulo - FEARP-USP ( email )

Av. Bandeirantes, 3900 - Monte Alegre
Ribeião Preto, 14040-900
Brazil
55 16 3602-4972 (Phone)

HOME PAGE: http://www.fearp.usp.br

Ricardo Lopes Cardoso

Brazilian School of Public and Business Administration ( email )

Rua Jornalista Orlando Dantas, 30
Office 206. Botafogo
Rio de Janeiro, Rio de Janeiro 22231-010
Brazil
+55-21 30832713 (Phone)

Rio de Janeiro State Univ., FAF ( email )

Rua Sao Francisco Xavier, 524
bloco B, sala 1024
Rio de Janeiro, Rio de Janeiro
Brazil

Valeria Lobo A. Boya

FUCAPE Business School ( email )

Av. Saturnino Rangel Mauro, 245
Vitoria, ES 29043-100
Brazil

Marcelo S. Pagliarussi

School of Economics, Business Administration and Accounting at Ribeirao Preto (FEA-RP/USP) ( email )

Av. Bandeirantes, 3900
Monte Alegre
Ribeirão Preto, SP 14040-905
Brazil

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