THE EFFECT OF FINANCIAL AND NON-FINANCIAL PERFORMANCE MEASURES ON MANAGERIAL BEHAVIOR

According to the existing literature, non-financial performance measures provide managers with incentives to improve long-term financial performance and, on the other hand, financial performance measures provide managers with incentives to improve short-term financial performance. The main reason is, that they are calculated ex-post and mostly cannot predict future performance. In this paper we test this statement and examine whether the use of financial or non-financial performance measures for incentive purposes increases or decreases short-term orientation of the managers. The analysis is carried out on a sample of Slovak companies.