Each student will be responsible for preparing a summary and criticizing an academic article that deals with management control systems. Students MUST select the following study on the Balanced Scor

Each student will be responsible for preparing a summary and criticizing an academic article that deals with management control systems. Students MUST select the following study on the Balanced Scor
Each student will be responsible for preparing a summary and criticizing an academic article that deals with management control systems. Students MUST select the following study on the Balanced Scorecard. The article is posted on Brightspace. Ding, S. and Beaulieu, P. 2011. The Role of Financial Incentives in Balanced Scorecard-Based Performance Evaluations: Correcting Mood Congruency Biases, Journal of Accounting Research, 49(5), p.1223-1247. The article assignment is expected to: Provide the article’s title, source, and publication date. State the article’s major points [10 marks]. Explain the authors’ motivation for the article [10 marks]. Specify what major concepts from ADM4345 were discussed by the article [15 marks]. Comment whether or not the article provided you with additional understanding of these major concepts [10 marks]. Critically evaluate the application of the Balanced Scorecard (BSC) as a performance evaluation tool, using relevant theories, managerial practices, and/or your personal working experiences [40 marks]. Critically evaluate some extra studies on the BSC and discuss the implications of these studies on the application of this important MCS tool and their link to the final exam article. Extra studies on the BSC will be posted on Brightspace, but you may find additional articles by yourself through University of Ottawa’s library [10 marks]. You are not expected to comment on the article’s statistical analyses, if any. This article assignment should include a cover page and should be presented in size-12 font, 1.5 line spacing, with normal margins, and not more than 2,000 words plus no more than 2 appendices. The assignment is to be professionally written, using appropriate syntax, grammar, vocabulary, and spelling [5 marks]. Your signed Statement of Academic Integrity should be attached.
Each student will be responsible for preparing a summary and criticizing an academic article that deals with management control systems. Students MUST select the following study on the Balanced Scor
The Role of Financial Incentives in Balanced Scorecard-Based Performance Evaluations: Correcting Mood Congruency Biases Author(s): SHUJUN DING and PHILIP BEAULIEU Source: Journal of Accounting Research , DECEMBER 2011 , Vol. 49, No. 5 (DECEMBER 2011), pp. 1223-1247 Published by: Wiley on behalf of Accounting Research Center, Booth School of Business, University of Chicago Stable URL: https://www.jstor.org/stable/41328957 JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected] Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms Wiley is collaborating with JSTOR to digitize, preserve and extend access to Journal of Accounting Research This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms DOI: 10.1111/J.1475-679X.2011.00421.X CHICAGO BOOTHS Journal of Accounting Research Vol. 49 No. 5 December 2011 Printed in U.S.A. The Role of Financial Incentives in Balanced Scorecard-Based Performance Evaluations: Correcting Mood Congruency Biases SHUJUN DING* AND PHILIP BEAULIEU* Received 14 September 2010; accepted 9 June 2011 ABSTRACT Moods are low-intensity affective states that individuals bring to a decision, and may be especially important when the balanced scorecard (BSCyf L s used for performance evaluation purposes. We propose that financial incen- tives can motivate decision-makers to correct mood congruency biases, in which judgments and decisions are consistent with moods. In experiment 1, participants rated the performance of one division manager based on two * University of Ottawa; ^ University of Calgary. An earlier version of this paper was presented at the 2008 AAA Midwest Regional Meeting, the 2008 AAA Annual Meeting, the 2008 CAAA Annual Meeting, and the 2009 ABO conference. It is based on the PhD dissertation (University of Calgaryyf R I W K H I L U V W D X W K R U V X S H U Y L V H G E W K H V H F R Q G D X W K R U 7 K H D X W K R U V Z R X O G O L N H W o thank the members of the committee, Cynthia Simmons, Kate White, and Michael Wright, and external examiners, Teresa Kline and Alan Webb. We also thank Douglas Skinner (the editoryf D Q G D Q D Q R Q P R X V U H I H U H H D Q G D F N Q R Z O H G J H W K H K H O S I X O F R P P H Q W V R I ) R G L O $ G M D R X G , Cam Graham, Linda Grensing-Pophal, Susan Haka, Irene Herremans, Steven Kaplan, Joanne Leek, Tim Miller, Cam Morrill, Janet Monili, Sean Peffer, Steve Salterio, Parbudyal Singh, and Gary Spraakman, and the comments of workshop participants at Brock University, Concordia University, University of Lethbridge, University of Manitoba, University of Ottawa, and York University. Financial support was provided by the University of Calgary to the first author. We thank Kate White for sharing her mood induction instrument. 1223 Copyright ©, University of Chicago on behalf of the Accounting Research Center, 2011 This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms 1224 S. DING AND P. BEAULIEU accounting measures and another manager based on a 16-measure BSC; there were mood congruency biases at both levels of information load. Fi- nancial incentives to make benchmark-consistent judgments eliminated bias in the former condition but not in the BSC condition. In experiment 2, in- centives were offered and performance evaluations were based on an eight- measure BSC; mood congruency bias was eliminated. Results suggest that management control systems, specifically financial incentives, should be in- cluded in future affect correction research. 1. Introduction Many claim that the balanced scorecard (BSCyf L V R Q H R I W K H P R V W L P S R U W D Q t management accounting innovations in the last two decades, and surveys consistently list it as one of the most popular management tools around the world (Rigby and Bilodeau [2009]yf $ F F R X Q W L Q J U H V H D U F K H U V K R Z H Y H U , have documented several biases and problems associated with its applica- tion (e.g., Lipe and Salterio [2000], Banker, Chang, and Pizzini [2004], Ittner, Larcker, and Meyer [2003]yf 7 K H F R P S O H [ L W R I W K H % 6 & L V E H O L H Y H d to result in information overloading, which, in turn, compromises decision quality when using the BSC for performance evaluation, as is commonly found in practice. We test whether the BSC’s complexity leaves it vulnera- ble to the well-documented mood congruency bias, and whether this bias is affected by financial incentives, another element of management control systems (MCSyf 2 X U V W X G O L Q N V % 6 & U H O D W H G E L D V H V D I I H F W D Q G 0 & 6 O L W H U D – ture. The term “affect” refers to feelings, including both moods and emotions. Moods are defined as low-intensity affective states that individuals bring to the decision context, while emotions are defined as more-intensive affective states with a definite cause and clear cognitive content related to decisions (Forgas [1992] , Edda, Moreno, and Smith [2001] , Moreno, Kida, and Smith [2002]yf 7 K H P R R G V D Q G H P R W L R Q V R I G H F L V L R Q P D N H U V D U H F U L W L F D O O L P S R U – tant because individuals rarely make decisions devoid of feeling. Forgas and George [2001, p. 5] commented that moods are especially important in examining individuals’ behaviors and play a crucial role in organizational settings, because: Moods thus provide the underlying affective context for most of our on- going thought processes and behaviors. Enduring mood states may be triggered by such fleeting cues as a passing smile, the weather, a pleasant room, a tone of voice, or a nonverbal gesture. Indeed, mild, nonspecific moods often have a more subtle and insidious influence on organizational behavior precisely because they lack elaborate cognitive content and thus often escape conscious scrutiny. The distinction between emotions and moods is very important in judg- ment and decision-making research. Emotions may or may not be useful in organizational settings; sometimes they provide content that is irrelevant to This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms INCENTIVES IN BALANCED SCORECARD-BASED EVALUATIONS 1225 decisions, but positive emotions resulting from being treated fairly by team members increase willingness to cooperate with them in a common task (Cremer and Hiel [2006] yf % G H I L Q L W L R Q W K R X J K P R R G V D U H X Q H T X L Y R F D O O y irrelevant to decision-making contexts. It is crucial, therefore, to improve our understanding of how, when, and why mood will influence decision- makers’ thinking and behavior (Forgas [2001a, 2001b]yf . Numerous studies have demonstrated that mood states impact decision- makers’ behavior, resulting in mood-congruent judgments (Fiedler [2001], Schwarz and Clore [1983] yf ) R U H [ D P S O H D P D Q D J H U P D U H D G D Q H Z V S D S H r story about poor prospects for recovery from a global recession, and be in a pessimistic mood later that day when rating a subordinate’s performance as below expectations. The cause of the mood, speculation about the future course of the economy, is unrelated to the judgment of past performance, and the manager is unaware of its influence. Mood congruency, also known as affect infusion, has been found in a variety of contexts and is a reliable everyday phenomenon (Forgas [2001a, 2001b]yf , W K D V D O V R E H H Q V W X G L H d in behavioral economics, including the role played by moods in investors’ decision-making (e.g., Saunders [1993], Hirshleifer and Shumway [2003], Kamstra, Kramer, and Levi [2003], Edmans, Garcia, and Norli [2007], Kaplanski and Levy [2010]yf . Research on correcting for mood congruency biases (McFarland and Buehler [1998], McFarland, White, and Newth [2003], Schwarz and Clore [1988], Tice and Bratslavsky [2000]yf K D V I R F X V H G R Q D W W H Q G L Q J W R D Q G D F – knowledging moods. Mood acknowledgment is based on the assumptions that people can correct for biasing influences better if they have a theory to explain them and they are motivated to correct their judgments (Wil- son and Brekke [1994], Wegener and Petty [1995]yf + R Z H Y H U P R R G D F – knowledgment strategies have not always been effective in prior research (Detweiler-Bedell and Salovey [2003], Gohm [2003], Showers and Kling [1996], Smith and Petty [1995]yf . We contribute to the affect literature by proposing that MCS, which have not been considered in bias correction models, provide an alternative mo- tivation to correct mood congruency biases. Conversely, we contribute to the MCS literature by suggesting a benefit that has been neglected: reduc- tion of mood congruency biases in judgment and decision-making. Prior re- search in accounting and auditing has drawn upon the affect literature and employed acknowledgment to reduce congruency biases (Kadous [2001]yf , but has not discussed or tested the ability of conventional MCS components to perform the same function, especially in the environment of the BSC, a popular and complex evaluation tool. In other words, mood congruency biases have not been as fully incorporated into accounting contexts as we attempt. Given that moods constitute the underlying context of organiza- tional behavior (Forgas and George [2001]yf D Q G W K D W 0 & 6 D U H L Q S O D F H L n most, if not all, organizations, the coexistence of moods and MCS in orga- nizations presents an interesting setting to understand the role MCS play in correcting for congruency bias. This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms 1226 S. DING AND P. BEAULIEU We design two experiments to examine our research questions. Our experiments tie monetary rewards to performance evaluations, an ar- rangement that is documented in both research and practice (Salvem- ini, Reilly, and Smither [1993], Murphy and Cleveland [1995], Grensing- Pophal [2001], Roch [2005], St-Onge et al. [2009]yf & R Q V L V W H Q W Z L W K S U L R r literature (e.g., Lipe and Salterio [2000, 2002], Libby, Salterio, and Webb [2004] , Banker, Chang, and Pizzini [2004] yf S D U W L F L S D Q W V L Q R X U V W X G P D N e subjective performance evaluations. Although the use of subjectivity in a BSC-based evaluation context may raise concerns, as some firms apply a formula-based approach to BSC evaluations (e.g., Malina and Selto [2001]yf W K H L Q Y R O Y H P H Q W R I V X E M H F W L Y L W L Q S H U I R U P D Q F H H Y D O X D W L R Q V L V Z H O l documented (Gibbs et al. [2004], Bol [2008], Ittner, Larcker, and Meyer [2003]yf . In experiment 1 , we establish a mood congruency bias affecting perfor- mance evaluation judgments in the absence of financial incentives; partici- pants who were induced to feel good (badyf J D Y H K L J K H U O R Z H U f evaluation scores to divisional managers. The bias appeared at a low level of infor- mation load, in which evaluations were based on two financial measures, and at a high level, where evaluations were based on a BSC including 16 measures. Our finding of mood congruency bias at both levels thus sug- gests that performance evaluation itself is a complex task that motivates evaluators to adopt an heuristic approach to complete it; the finding is also consistent with a recent affect study in which auditors feeling good (badyf made a higher (loweryf Y D O X D W L R Q R I L Q Y H Q W R U & K X Q J & R K H Q D Q G 0 R Q U R e [2008]yf : K H Q I L Q D Q F L D O L Q F H Q W L Y H V W R P D N H E H Q F K P D U N F R Q V L V W H Q W H Y D O X D – tions were added in experiment 1 , they eliminated mood congruency bias in the low, but not the high, information load condition, reflecting that information load and evaluators’ skills may influence the effectiveness of financial incentives as a correction tool. Experiment 2 introduced an inter- mediate level of information load in which performance evaluations were based on a reduced BSC that comprised eight measures. Financial incen- tives for benchmark-consistent evaluations were offered in experiment 2 and they eliminated mood congruency bias. This result suggests that, to en- able financial incentives to reduce mood congruency biases, the number of measures included in a BSC must be reduced to the capacity of working memory (Miller [1956]yf . 2. Theory and Hypotheses We first review in this section prior literature in psychology, accounting, and behavioral economics/finance on the mood congruency effect, then develop our first hypothesis, in which such an effect is expected when in- dividuals perform the task of evaluations without financial incentives. In section 2.1, we discuss mood de-biasing mechanisms proposed in prior re- search, and effects of financial incentives in accounting, economics, and organizational contexts. The second hypothesis on the correcting role of This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms INCENTIVES IN BALANCED SCORECARD-BASED EVALUATIONS 1227 incentives follows from this discussion. In section 2.2, we develop a research question regarding the role of information load in mood congruency bias correction. Mood congruency bias has been well documented in psychology litera- ture (e.g., Forgas and George [2001] yf E X W D I I H F W U H V H D U F K L Q D F F R X Q W L Q J K D s been devoted primarily to biases caused by emotions in capital budgeting and investment decisions (e.g., Kida, Moreno, and Smith [2001], Moreno, Kida, and Smith [2002], Sawers [2005], Kaplan, Petersen, and Samuels [2007]yf $ Q R W D E O H H [ F H S W L R Q L V & K X Q J & R K H Q D Q G 0 R Q U R H > @ Z K o document a mood congruency bias among auditing professionals and stu- dents.1 Emotional reactions occur in accounting contexts, but mood states are much more common and constitute the underlying affective context in which judgments are made (Forgas and George [2001], Chung, Cohen, and Monroe [2008]yf 7 K H P R U D O H L Q I L U P V D U H V X O W R I I D F W R U V V X F K D V P H U J – ers, expansion, good or bad leadership, success, and failure, probably cre- ates moods that employees bring to their tasks, and those who evaluate the performance of others may be especially prone to affective influences. Moods influence judgment and decision-making when individuals heuristically process information (Schwarz and Clore [1983], Forgas [1995], Forgas and George [2001]yf $ I I H F W D V L Q I R U P D W L R Q K H X U L V W L F V D U e found in both psychology and accounting literature (Clore, Schwarz, and Conway [1994], Schwarz and Clore [1983, 2003], Kadous [2001]yf L Q W K H V e heuristics, affect itself is a source of information. For example, in an au- diting litigation setting, jurors may feel really bad when they learn about negative audit outcomes, and may use their negative feelings as relevant information to blame auditors (Kadous [2001]yf . D G R X V V W X G L H G H P R W L R Q V , but recent research examining the behavior of investors also shows that stock returns are significantly affected by investors’ moods arising from avi- ation disasters (e.g., Kaplanski and Levy [2010]yf V R F F H U J D P H O R V V H V H J , Edmans, Garcia, and Norli [2007] yf D Q G Z H D W K H U + L U V K O H L I H U D Q G 6 K X P Z D y [2003]yf L Q D P R R G F R Q J U X H Q W Z D 7 K H U H I R U H W K H D I I H F W D V L Q I R U P D W L R n heuristic is related to both moods and emotions. Wilson and Brekke [1994, p. 128] argue that people tend to adopt heuristics when processing infor- mation in order to reduce effort; they are not aware that they use such heuristics, and thus the influence of irrelevant information in particular is difficult to correct (Wilson, Centerbar, and Brekke [2002]yf $ V . D G R X s [2001, p. 429] argues, the affect-as-information heuristic could be imple- mented when individuals make complex social judgments and difficult and complex evaluations. The first hypothesis applies the affect-as-information heuristic literature to performance evaluations based on accounting infor- mation, predicting that individuals may heuristically conduct performance 1 Our examination of mood effects is different from Chung, Cohen, and Monroe [2008]. First, we focus on the application of the BSC to performance evaluations, while they investi- gated auditor judgments. Second, more importantly, we focus on correction of mood congru- ency bias, while they did not. This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms 1228 S. DING AND P. BEAULIEU evaluations, a complex task, when there is no financial incentive in place. It aims to replicate the mood congruency bias in this setting, and serves as a necessary baseline against which we examine the effects of financial incen- tives. We assert that HI holds regardless of the degree of information load, and defer a discussion of the role of information load in bias correction to section 2.2. HI: When financial incentives are not in place, performance evalua- tions will be higher (loweryf Z K H Q S R V L W L Y H Q H J D W L Y H f moods are present. 2.1 FINANCIAL INCENTIVES AND MOOD CONGRUENCY CORRECTION Financial incentives have rarely been discussed in prior research on bias correction and performance evaluation. This section reviews the limited research in these areas relevant to our second hypothesis and extends the literature review to the field of economics. We pay particular attention to Rickman and Witt [2008] and Salvemini, Reilly, and Smither [1993]; both examine the effects of financial incentives on correcting biases. Drawing upon these ideas, we predict the effect of financial incentives in mood cor- rection in H2. Performance-contingent financial rewards are a conventional means of motivating improved performance in organizations (Awasthi and Pratt [1990], Drake, Haka, and Ravenscroft [1999], Bonner et al. [2000], Bonner and Sprinkle [2002] yf % R Q Q H U D Q G 6 S U L Q N O H > @ S R L Q W R X W W K D W a monetary incentive works first by improving the incentive-effort link, then by enhancing the effort-performance relation. Improved performance re- quires success in both links. In general, affect correction research in psychology is uninformed by accounting research on cognitive effects of monetary incentives. The pri- mary method of correcting affect-induced biases in the psychology litera- ture is acknowledgment/attribution, in which decision-makers are directed to evaluate their affective states or attribute their feelings to other sources before making their judgments (McFarland, White, and Newth [2003] , Schwarz and Clore [1983]yf $ F N Q R Z O H G J P H Q W D W W U L E X W L R Q K D V D O V R E H H n studied as a correction mechanism in auditing research (Kadous [2001]yf . However, affect acknowledgment has not always been effective in correct- ing biases. Wilson and Brekke [1994, p. 126] attributed mixed results to the fact that people “underestimate their own susceptibility to bias, and they overestimate the extent to which they can control their judgments and feelings.” We propose that financial rewards can create motivation pow- erful enough to correct a mood congruency bias without requiring mood acknowledgment.2 2 Some may argue that the effect of financial incentives on mood congruency correc- tion is not due to the motivation induced, but because moods could be changed by the in- centives. Empirical evidence in psychology and accounting did not find that bias-correction This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms INCENTIVES IN BALANCED SCORECARD-BASED EVALUATIONS 1229 We now turn to the fields of economics and organizational behavior to further review the effect of financial incentives. The economics paper most relevant to our second hypothesis is that by Rickman and Witt [2008], in which a financial incentive eliminated unconscious bias. The bias was a fa- voritism in English soccer, in which referees awarded more injury (extrayf time when the home team was behind by one goal, and less time when it was ahead by one goal. In the 2001-2002 season, for the first time, the En- glish Premier League employed truly professional referees and paid them salaries. Rickman and Witt found that favoritism that had existed before that season was eliminated, and, after controlling for effects like changes in referee quality, concluded that incentives were responsible. In H2 we pre- dict that incentives can eliminate mood congruency, another unconscious bias. Before we review the particularly relevant study in performance eval- uation involving financial incentives, we first establish the practicality of incentivizing performance evaluations. The quality of performance evaluation and how to motivate managers to make effective evaluations concern both academics and managers. Ac- cording to Grensing-Pophal [2010], a Senior Professional in Human Re- sources (SPHRyf L W L V F R P P R Q S U D F W L F H W R U D W H P D Q D J H U V R Q W K H W L P H O L Q H V s and quality of their performance evaluations. Human resources (HRyf H [ – perts claim that managers should be held accountable for the quality of performance evaluation and such quality should be tied to managers’ com- pensation (Grensing-Pophal [2001, p. 47]yf / H D G L Q J V F K R O D U V L Q W K H K X P D n relations field (Murphy and Cleveland [1995] yf D Q G + 5 P D Q D J H U V 6 W 2 Q J e et al. [2009]yf D O V R U H F R P P H Q G W K D W W K H D F F X U D F D Q G T X D O L W R I S H U I R U – mance evaluations should be financially rewarded in order to provide suf- ficient incentives. Our study thus reflects both actual and recommended performance evaluation practices. Few judgment and decision-making studies have addressed the prac- tice of incentivizing performance evaluations; the studies by Salvemini and his coauthors are exceptions. Salvemini [1988] and Salvemini, Reilly, and Smither [1993] offered evaluators financial incentives to be accurate; they were motivated to give more accurate appraisals to customer sales repre- sentatives after watching videotapes in which such representatives were per- forming their tasks. In Salvemini, Reilly, and Smither [1993], a 3 x 3 fac- torial design was adopted, with financial incentives and prior performance information being independent variables. Financial incentives were either mechanisms changed participants’ experience of moods. In Schwarz and Clore’s [1983] clas- sic study, for example, participants receiving attribution manipulation no longer rely on their moods to assess their life satisfaction, but retain either positive or negative moods after the manipulation. Kadous [2001, p. 439] explicitly indicates that attribution instruc- tions/manipulations are “not expected to change the experience of affect,” and the empirical evidence presented in her experiment is consistent with her arguments. As discussed later, we did not measure mood states, but prior studies suggest that bias-correction schemes alone do not change moods. This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms 1230 S. DING AND P. BEAULIEU present or absent; when they were present, raters were informed about such rewards either prior to viewing the tapes or after they viewed the tapes. Similarly, raters in the positive (negativeyf S U L R U S H U I R U P D Q F H L Q I R U P D W L R n condition were informed that ratees had received above (belowyf D Y H U D J e ratings for their prior work; the third group did not receive any information on prior performance. Salvemini, Reilly, and Smither [1993] manipulated financial incentives in a way quite similar to ours, which is discussed later in the section on experimental design. More specifically, they informed the raters that the true performance scores of ratees were provided by a group of experts, and raters would be rewarded cash depending on the extent to which their evaluations came close to expert ratings. Those who provided the most accurate evaluations, that is, closest to expert ratings, would re- ceive $200. Consistent with their hypotheses, when financial incentives were absent, prior performance information led to biased appraisals of the current pe- riod such that raters receiving positive (negativeyf S U L R U S H U I R U P D Q F H L Q – formation gave more (lessyf I D Y R U D E O H U D W L Q J V W K D Q W K H L U F R X Q W H U S D U W V Z L W K – out this information; that is, the lack of motivation resulting from the lack of financial incentives led to an assimilation effect. Furthermore, raters who were provided with prior performance information, either positive or negative, evaluated ratees less accurately compared to those with no such information. When monetary incentives were offered, as predicted, prior performance information failed to influence either the average rating or accuracy. Salvenimi et al. further found that the timing to offer incentives did matter; raters who were provided with the incentives before viewing the tapes of ratees’ performance gave evaluations of the highest quality. Financial incentives offered in these studies enabled participants to cor- rect for prior information bias without being made aware of it. Our proposi- tion differs significantly from Salvemini, Reilly, and Smither [1993] because we address mood congruency biases and correction, whereas Salvemini et al. were interested strictly in decision-making accuracy; as noted before, mood congruency bias is understudied in accounting, and using financial incentives to correct for such an effect has not been examined in account- ing and psychology. More importantly, we examine the application of the BSC, a popular yet complex performance evaluation tool, and consider the possible impact arising from information load when financial incentives are employed to debias moods. The widespread application of the BSC and the well-documented concerns arising from its application indicate that more work is needed to examine the design of this popular tool; our in- vestigation of BSC in the performance evaluation setting in which moods could be an important contextual factor sheds new light on this manage- ment accounting innovation. Evaluators in Salvemini et al. were required to evaluate customer sales representatives in just three dimensions, but the BSC employed by our study involves four perspectives, with each per- spective involving multiple measures, as discussed below. The evaluation task thus is much more complex in our study, but Salvemini et al. does This content downloaded from 137.122.64.209 on Tue, 01 Nov 2022 23:08:28 UTC All use subject to https://about.jstor.org/terms INCENTIVES IN BALANCED SCORECARD-BASED EVALUATIONS 1231 provide us with a precedent for experimental use of financial incentives in performance evaluation tasks. H2 proposes using incentives to eliminate an unconscious bias, similar to the result of Rickman and Witt (2008yf E X t in a controlled, rather than natural, experiment. We examine two levels of information load in the context of performance evaluation, but H2 does not predict whether incentives will be effective at only one or at both lev- els of inf

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