We investigate the relationship between internal performance evaluation and the ability of external market participants to assess the effectiveness of management's quality strategy for a sample of 156 Australian manufacturing firms that link executive compensation to non-financial performance measures (NFPM).We find that for firms where management compensation is tied to non-financial performance measures, organizational financial performance, as measured by return on investment, has no significant direct association with the extent of disclosure of non-financial performance measures in the financial statements by Australian manufacturing firms. However, this suggests that the origination of a firm's non-financial performance measures indirectly and significantly affects the financial performance of an organization through the implementation of quality based strategy. Further, we find that manufacturing firms that place greater emphasis on quality strategy disclosed more information regarding non-financial measures in their annual reports, and that only for firms following a quality strategy, the disclosure of non-financial performance measures positively impact operating financial performance.

Management accountancy has a dynamic role to play in the competitive strategy of modern global businesses. This book sets out key strategic principles and then assesses how management accountancy can affect and direct these strategies. Engaging case studies reveal how theories and concepts translate into real business practice. Throughout, the book emphasizes: - how accounting initiatives can trigger assessment and improvement of performance management - the importance of managerial decision making to good business practice - how today's management accountancy measures against current research Written for advanced undergraduate, postgraduate and MBA students taking courses on management accounting and performance measurement and management, the book will be also of interest to management and business consultants, professional accountants and accounting academics.

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We examine the relationship between quality-based manufacturing strategy and the use of different types of performance measures, as well as their separate and joint effects on performance. A key part of our investigation is the distinction between financial and both objective and subjective nonfinancial measures. Our results support the view that performance measurement diversity benefits performance as we find that, regardless of strategy, firms with more extensive performance measurement systems, especially those that include objective and subjective nonfinancial measures, have higher performance. But our findings also partly support the view that the strategy-measurement fit affects performance. We find that firms that emphasize quality in manufacturing use more of both objective and subjective nonfinancial measures. However, there is only a positive effect on performance from pairing a quality-based manufacturing strategy with extensive use of subjective measures, but not with objective nonfinancial measures.

Extant accounting research has focused on the value relevance of nonfinancial performance measures and financial performance measures separately. I examine the value relevance of the difference in those performance metrics. Specifically, I examine whether a difference in nonfinancial and financial information is an indicator of stronger or weaker future firm performance. Additionally, I examine whether the significant difference between nonfinancial and financial measures and future firm performance is related to the life cycle stage of the firm. Finally, I examine whether these differences have an impact on market participants' assessment of firm value. My results suggest that the difference between nonfinancial and financial performance measures is an indicator for future firm performance. Specifically, the higher the difference in performance measure the weaker the future performance of the firm. However, this difference is somewhat mitigated given the various life cycle of the firms. For the mature firms the difference between nonfinancial and financial measures serves as an indicator for future performance, while a firm in the early or growth stage the difference is not a strong indicator of future performance. Additionally, I find that market participants do not impound the difference between nonfinancial and financial measures into their assessment of firm value. This finding supports both proximity and transparency theory as it relates to how these differences are communicated to financial statement users. Given that the difference between nonfinancial and financial provides a signal of future performance suggests that a trading strategy may be implemented to earn future abnormal returns. I develop a trading strategy by taking a long (short) position in firms with a low (high) difference between their nonfinancial and financial performance measures and find significant positive abnormal returns.