...Conceptual Foundations of the Balanced Scorecard Robert S. Kaplan Working Paper 10-074 Copyright © 2010 by Robert S. Kaplan Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Conceptual Foundations of the Balanced Scorecard1 Robert S. Kaplan Harvard Business School, Harvard University 1 Paper originally prepared for C. Chapman, A. Hopwood, and M. Shields (eds.), Handbook of Management Accounting Research: Volume 3 (Elsevier, 2009). 1 Conceptual Foundations of the Balanced Scorecard Abstract David Norton and I introduced the Balanced Scorecard in a 1992 Harvard Business Review article (Kaplan & Norton, 1992). The article was based on a multi-company research project to study performance measurement in companies whose intangible assets played a central role in value creation (Nolan Norton Institute, 1991). Norton and I believed that if companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems. After publication of the 1992 HBR article, several companies quickly adopted the Balanced Scorecard giving us deeper and broader insights into its power and potential. During the next 15 years, as it was adopted by thousands of private, public, and nonprofit enterprises around the world,...
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...Conceptual Foundations of the Balanced Scorecard Robert S. Kaplan Working Paper 10-074 Copyright © 2010 by Robert S. Kaplan Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Conceptual Foundations of the Balanced Scorecard1 Robert S. Kaplan Harvard Business School, Harvard University 1 Paper originally prepared for C. Chapman, A. Hopwood, and M. Shields (eds.), Handbook of Management Accounting Research: Volume 3 (Elsevier, 2009). 1 Conceptual Foundations of the Balanced Scorecard Abstract David Norton and I introduced the Balanced Scorecard in a 1992 Harvard Business Review article (Kaplan & Norton, 1992). The article was based on a multi-company research project to study performance measurement in companies whose intangible assets played a central role in value creation (Nolan Norton Institute, 1991). Norton and I believed that if companies were to improve the management of their intangible assets, they had to integrate the measurement of intangible assets into their management systems. After publication of the 1992 HBR article, several companies quickly adopted the Balanced Scorecard giving us deeper and broader insights into its power and potential. During the next 15 years, as it was adopted by thousands of private, public, and nonprofit enterprises around the world,...
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...Handbook of Management Accounting Research Volume 3 Edited by CHRISTOPHER S. CHAPMAN Imperial College London, UK ANTHONY G. HOPWOOD University of Oxford, UK MICHAEL D. SHIELDS Michigan State University, USA AMSTERDAM – BOSTON – HEIDELBERG – LONDON – NEW YORK – OXFORD PARIS – SAN DIEGO – SAN FRANCISCO – SINGAPORE – SYDNEY – TOKYO Elsevier The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, UK First edition 2009 Copyright © 2009 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone ( 44) (0) 1865 843830; fax ( 44) (0) 1865 853333; email: permissions@elsevier.com. Alternatively visit the Science and Technology Books website at www.elsevierdirect.com/rights for further information Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for...
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...corporate culture of integrity driven performance and a new corporate transparency. Management and boards now feel compelled to ensure that proper governance processes are in place to protect corporate reputation, brand image and share holder value. According to Pricewaterhouse Cooper’s 8th Annual global CEO survey (Dec 2004), 50% of retail industry CEOs believe that there is a strong relationship among all elements of GRC (governance, risk and compliance) and that effective governance can be a value driver and a benefit versus a cost, to their companies. Effective corporate governance requires management and board involvement, accountability, embracing the processes, compliance, and structure required to direct and manage the affairs of a corporation. Its overall goal is to ensure the financial viability to the enterprise and enhance share holder value. For the retail and customer industry, globalization, which entails multinational operations, various financial reporting systems, and complex supply chain with wholesalers, distributors, and multiple types of retailers, not to mention multiple brand portfolios, and various types of outlets, provides significant rationales for management and boards to develop an effective GRC program. Successful corporate governance depends largely on trade-off among the various conflicting interest groups like government, society, inventors, creditors and employees of the organization. This study critically discusses the implementation practice...
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...Seventh Edition Accounting for Decision Making and Control Jerold L. Zimmerman University of Rochester To: Conner, Easton, and Jillian ACCOUNTING FOR DECISION MAKING AND CONTROL, SEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2006, and 2003. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN MHID 978-0-07-813672-6 0-07-813672-5 Vice President & Editor-in-Chief: Brent Gordon Vice President of EDP: Sesha Bolisetty Editorial Director: Stewart Mattson Sponsoring Editor: Dick Hercher Marketing Manager: Sankha Basu Editorial Coordinator: Rebecca Mann Project Manager: Erin Melloy Design Coordinator: Brenda A. Rolwes Cover Designer: Studio Montage, St. Louis, Missouri Production Supervisor: Sue Culbertson Media Project Manager: Balaji Sundararaman Compositor: MPS Limited, A Macmillan Company...
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...Seventh Edition Accounting for Decision Making and Control Jerold L. Zimmerman University of Rochester To: Conner, Easton, and Jillian ACCOUNTING FOR DECISION MAKING AND CONTROL, SEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2006, and 2003. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN MHID 978-0-07-813672-6 0-07-813672-5 Vice President & Editor-in-Chief: Brent Gordon Vice President of EDP: Sesha Bolisetty Editorial Director: Stewart Mattson Sponsoring Editor: Dick Hercher Marketing Manager: Sankha Basu Editorial Coordinator: Rebecca Mann Project Manager: Erin Melloy Design Coordinator: Brenda A. Rolwes Cover Designer: Studio Montage, St. Louis, Missouri Production Supervisor: Sue Culbertson Media Project Manager: Balaji Sundararaman Compositor: MPS Limited, A Macmillan Company...
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... Solomon Appel Robert H. Ashton Reza Barkhi Metropolitan College of New York, New York, NY, USA Fuqua School of Business, Duke University, Durham, NC, USA Pamplin College of Business, Virginia Polytechnic Institute and State University, Blacksburg, VA, USA School of Management, University of Michigan-Dearborn, MI, USA College of Business Administration, San Diego State University, San Diego, CA, USA Department of Accounting, University of Arkansas at Little Rock, AR, USA Zicklin School of Business, CUNY – Baruch College, New York, NY, USA Belk College of Business, University of North Carolina at Charlotte, NC, USA College of Business and Economics, West Virginia University, Morgantown, WV, USA RSM Erasmus University, Department of Financial Management, Rotterdam, The Netherlands Mohamed E. Bayou Chee W. Chow Cynthia M. Daily Harry Z. Davis Nabil Elias Arron Scott Fleming Frank G. H. Hartmann vii viii LIST OF CONTRIBUTORS Fred A. Jacobs Frances Kennedy James M. Kohlmeyer, III Leslie Kren John Y. Lee Michael S. Luehlfing Adam S. Maiga School of Accountancy, Georgia State University, Atlanta, GA, USA Department of Accountancy and Legal Studies, Clemson University, SC, USA College of Business, East Carolina University, Greenville, NC, USA School of Business, University of Wisconsin, Milwaukee, WI, USA Lubin School of Business, Pace University, Pleasantville, NY, USA School of Professional Accountancy, Louisiana Tech University, LA, USA School of Accounting...
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...Chapter 3 Strategy Implementation This part of the course examines what is often called the action phase of the strategic management process: implementation of the chosen strategy. Up to this point, three major phases have been covered: strategy formulation, analysis of alternative strategies, and strategic choice. Even after grand and business strategies are determined and long term objectives are set, the strategic management is far from complete. While these phases are important, they alone cannot ensure success. The strategy must be translated into concrete action, and that action must be carefully implemented. Otherwise, accomplishment is left alone to chance. The tasks of operationalzing, institutionalizing and controlling the strategy still remain. These tasks signal a critical new phase in the strategic management process: translating strategic thought into strategic action. This chapter discusses key aspects of the implementation phase of the strategic management. 3.1. Operationalizing the Strategy: Annual Objectives, Functional Objectives, and Business Policies Shifting from formulation to implementation gives rise to three interrelated concerns. These are the three interrelated stages of successful strategy implementation. 1. Identification of measurable, mutually determined annual objectives. 2. Development of specific functional strategies. 3. Development and communication of concise policies to guide decisions. Annual objectives guide...
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...Principles of Management Control Systems 20 Fo rI B ICFAI UNIVERSITY S U se O nl y C la s s of 09 Principles of Management Control Systems 20 Fo rI B ICFAI Center for Management Research Road # 3, Banjara Hills, Hyderabad – 500 034 S U se O nl y C la s s of 09 The Institute of Chartered Financial Analysts of India, January 2006. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying or otherwise – without prior permission in writing from Institute of Chartered Financial Analysts of India. Fo ISBN 81-7881-995-3 Ref. No. PMCS/A 01 2K6 31 For any clarification regarding this book, the students may please write to ICFAI giving the above reference number, and page number. While every possible care has been taken in preparing this book, ICFAI welcomes suggestions from students for improvement in future editions. rI B S U se O nl y C la s s of 20 09 Contents PART I: AN OVERVIEW OF MANAGEMENT CONTROL SYSTEMS Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Introduction to Management Control Systems Approaches to Management Control Systems Designing Management Control Systems Key Success Variables as Control Indicators Organizing for Adaptive Control Autonomy and Responsibility Transfer Pricing 3 15 28 42 57...
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...Principles of Management Control Systems 20 Fo rI B ICFAI UNIVERSITY S U se O nl y C la s s of 09 Principles of Management Control Systems 20 Fo rI B ICFAI Center for Management Research Road # 3, Banjara Hills, Hyderabad – 500 034 S U se O nl y C la s s of 09 The Institute of Chartered Financial Analysts of India, January 2006. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying or otherwise – without prior permission in writing from Institute of Chartered Financial Analysts of India. Fo ISBN 81-7881-995-3 Ref. No. PMCS/A 01 2K6 31 For any clarification regarding this book, the students may please write to ICFAI giving the above reference number, and page number. While every possible care has been taken in preparing this book, ICFAI welcomes suggestions from students for improvement in future editions. rI B S U se O nl y C la s s of 20 09 Contents PART I: AN OVERVIEW OF MANAGEMENT CONTROL SYSTEMS Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Introduction to Management Control Systems Approaches to Management Control Systems Designing Management Control Systems Key Success Variables as Control Indicators Organizing for Adaptive Control Autonomy and Responsibility Transfer Pricing 3 15 28 42 57...
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...the current performance of the various operations is compared to a predetermined standard or ideal performance and in case of variance remedial measures are adopted to confirm operations to set plan or policy. Some of the features of MANAGEMENT CONTROL SYSTEM are as follows: ➢ Total System: MANAGEMENT CONTROL SYSTEM is an overall process of the enterprise which aims to fit together the separate plans for various segments as to assure that each harmonizes with the others and that the aggregate effect of all of them on the whole enterprise is satisfactory. ➢ Monetary Standard: MANAGEMENT CONTROL SYSTEM is built around a financial structure and all the resources and outputs are expressed in terms of money. The results of each responsibility centre in respect to production and resources are expressed in terms of a common denominator of money. ➢ Definite pattern: It follows a definite pattern and time table. The whole operational activity is regular and rhythmic. It is a continuous process even if the plans are changed in the light of experience or technology. ➢ Coordinated System: It is a fully coordinated and integrated system. ➢ Emphasis: Management control requires emphasis both on the search for planning as well as control. Both should go hand in hand to achieve the best results. ➢ Function of every manager: Manager at every level as to focus towards future operational and accounting data, taking into consideration past performance, present trends...
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...business and hence from time to time the current performance of the various operations is compared to a predetermined standard or ideal performance and in case of variance remedial measures are adopted to confirm operations to set plan or policy. Features of management control system Total System: MANAGEMENT CONTROL SYSTEM is an overall process of the enterprise which aims to fit together the separate plans for various segments as to assure that each harmonizes with the others and that the aggregate effect of all of them on the whole enterprise is satisfactory. Monetary Standard: MANAGEMENT CONTROL SYSTEM is built around a financial structure and all the resources and outputs are expressed in terms of money. The results of each responsibility centre in respect to production and resources are expressed in terms of a common denominator of money. Definite pattern: It follows a definite pattern and time table. The whole operational activity is regular and rhythmic. It is a continuous process even if the plans are changed in the light of experience or technology. Coordinated System: It is a fully coordinated and integrated system. Emphasis: Management control requires emphasis both on the search for planning as well as control. Both should go hand in hand to achieve the best results. Function of every manager: Manager at every level as to focus towards future operational and accounting data, taking into consideration past performance, present trends and anticipated economic and...
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...ACCOUNTING RESEARCH Vol. 9, No. 2 2010 pp. 21–43 American Accounting Association DOI: 10.2308/jiar.2010.9.2.21 The Effect of Institutional and Cultural Factors on the Perceptions of Earnings Management Marshall Geiger and Joyce van der Laan Smith ABSTRACT: In this study we examine the effect of stakeholder orientation versus shareholder orientation, and the level of cultural secrecy on individuals’ perceptions of earnings management practices. Examining perceptions from 1,260 participants from 13 countries indicates that individuals from stakeholder-oriented institutional backgrounds were less accepting of earnings management, including both accounting earnings management and operating earnings management activities, than participants from shareholder-oriented institutional backgrounds, and that individuals from secretive cultures were more accepting of both types of earnings management activities. Our findings provide evidence of the anticipated perceptual differences across countries with respect to earnings management and suggest the need for further research linking perceptions to reported earnings management measures. I. INTRODUCTION constant pressure in accounting and business across the globe is for companies to report stable, if not growing, financial position to stockholders, creditors, analysts, and other interested parties. With this strain comes the pressure on the firm’s financial reporting executives to “manage” the company’s reported financial results. In...
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...This page intentionally left blank Business Performance Measurement Drawing together contributions from leading thinkers around the world, this book reviews recent developments in the theory and practice of performance measurement and management. Significantly updated and modified from the first edition, the book includes ten new chapters that provide a comprehensive review of performance measurement from the perspectives of accounting, marketing, operations, public services and supply chain management. In addition to these functional analyses the book explores performance measurement frameworks and methodologies, practicalities and challenges, and enduring questions and issues. Edited by one of the world’s leading experts on performance measurement and management, Business Performance Measurement will be of interest to graduate students, managers and researchers who wish to understand more about the latest developments in this rapidly changing field. Andy Neely is Deputy Director of the ESRC/EPSRC AIM Research initiative, Professor of Operations Strategy and Performance at Cranfield School of Management, and Visiting Professor of Operations Management at London Business School. Business Performance Measurement Unifying theories and integrating practice Second edition Edited by Andy Neely CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge...
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...diverse needs of patients in a hospital intensive care unit scores high on task significance; sweeping floors in a hospital scores low. 4.Autonomy: the degree to which a job provides the workers freedom, independence, and discretion in scheduling work and determining the procedures for carrying it out. A salesperson that schedules his or her own work each day decides on the sales approach for each customer without supervision has a highly autonomous job. A salesperson who is given a set of leads each day and is required to follow a standardized sales script with potential customers has a job low on autonomy. 5. Feedback: the degree to which carrying out work activities generates direct and clear information about your own performance. A job with high feedback is assembling iPads and testing them to see...
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