The influence of lead indicator strength on the use of nonfinancial measures in performance management: Evidence from CEO compensation schemes

• 成果类型: Review
• 署名作者: O'Connell, Vincent; O'Sullivan, Don
• 署名单位: University of Amsterdam; University of Melbourne
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.2124
• 发表日期: 2014
• 页码: 826-844
• 关键词: customer satisfaction; Agency theory; lead indicator strength; ceo compensation; nonfinancial measures

摘要

Nonfinancial measures (NFMs) are a common feature of strategic performance management frameworks. We examine the role of one widely used NFM: customer satisfaction, in one aspect of strategic performance management: CEO compensation schemes. Drawing on agency theory precepts, we hypothesize that the extent to which firms link CEO compensation to customer satisfaction is influenced by satisfaction's ability to act as a leading indicator of future profitability (lead indicator strength). We further hypothesize that the extent to which customer satisfaction's lead indicator strength influences the weighting of satisfaction in CEO compensation schemes has a positive influence on future shareholder value. Our empirical results offer strong support for both hypotheses and extend research on the use and efficacy of NFMs in CEO compensation schemes. Copyright (c) 2013 John Wiley & Sons, Ltd.