The Balanced Scorecard: The Effects of Assurance and Process Accountability on Managerial Judgment

35 Pages Posted: 21 Jul 2002

See all articles by Theresa Libby

Theresa Libby

Kenneth G. Dixon School of Accounting - University of Central Florida

Steven Salterio

Queen's University - Smith School of Business

Alan Webb

University of Waterloo - School of Accounting and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 16, 2002

Abstract

The balanced scorecard has been hailed as one of the major developments in management accounting in the last decade. Lipe and Salterio (2000) show that one of the key features of this development, the inclusion of measures that are unique to the strategic objectives of a business unit, tend to be ignored by managers when making performance evaluation judgments. This study employs a debiasing framework (Kennedy 1993, 1995) to examine whether assurance over the reliability and relevance of the performance measures and/or invoking process accountability via a requirement to justify one's performance evaluation mitigates this bias. Results suggest that both an assurance report over all measures and the requirement to justify an evaluation to a superior reduce the common measures bias. Implications for theory and practice are discussed.

Keywords: balanced scorecard, performance measures, performance evaluation, debiasing, assurance, justification, and process accountability

JEL Classification: M40, M46, J33, L21

Suggested Citation

Libby, Theresa and Salterio, Steven E. and Webb, Alan, The Balanced Scorecard: The Effects of Assurance and Process Accountability on Managerial Judgment (June 16, 2002). Available at SSRN: https://ssrn.com/abstract=317486 or http://dx.doi.org/10.2139/ssrn.317486

Theresa Libby

Kenneth G. Dixon School of Accounting - University of Central Florida ( email )

Orlando, FL
United States

Steven E. Salterio

Queen's University - Smith School of Business ( email )

Kingston, Ontario K7L 3N6
Canada
613-533-6926 (Phone)

HOME PAGE: http://smith.queensu.ca/faculty_and_research/faculty_list/salterio-steven.php

Alan Webb (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada

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