The impact of Balanced Scorecard excellence on shareholder returns

: This study investigates the relationship between excellence in Balanced Scorecard (BSC) adoption and shareholder returns within companies from different industries and regions. We identify listed member organizations of the Balanced Scorecard Hall of Fame as excellent BSC adopters and compare their shareholder returns with the performance of companies by size and industry affiliation. The results of former studies on the impact of the BSC on shareholder return have been contradictory. The result of our study stands in contrast to outcomes of studies that find no difference between BSC-adopting and non-adopting companies: We find strong evidence that BSC companies outperform their matched counterparts in shareholder returns and in return on assets during the three-year post- adoption period. However, we find no evidence that BSC adopters manage to maintain their competitive advantage in the long term. Finally, we show that BSC adopters significantly outperform their respective industry indices in the three years after BSC adoption and in the long term. Abstract This study investigates the relationship between excellence in Balanced Scorecard (BSC) adoption and shareholder returns within companies from different industries and regions. We identify listed member organizations of the Balanced Scorecard Hall of Fame as excellent BSC adopters and compare their shareholder returns with the performance of companies by size and industry affiliation. The results of former studies on the impact of the BSC on shareholder return have been contradictory. The result of our study stands in contrast to outcomes of studies that find no difference between BSC-adopting and non-adopting companies: We find strong evidence that BSC companies outperform their matched counterparts in shareholder returns and in return on assets during the three-year post- adoption period. However, we find no evidence that BSC adopters manage to maintain their competitive advantage in the long term. Finally, we show that BSC adopters significantly outperform their respective industry indices in the three years after BSC adoption and in the long term. Our study investigates differences in shareholder returns between Hall of Fame organizations that have shown Balanced Scorecard Excellence and industry counterparts that do not use the BSC. For that purpose, a matched pair design considering industry affiliation and company size is adopted. Paired-samples t-tests and Wilcoxon signed-rank tests are conducted to explore significant differences in shareholder returns among Hall of Fame members and non-adopters of the BSC in post-adoption periods. This research contributes an updated quantitative study on the impact of BSC usage on shareholder returns. The results show that BSC-adopting companies outperform their representative index in both periods of observation. The three-year post-adoption results support the results of the peer comparison (Hypothesis 1). We reject the null and accept the alternative hypothesis. The difference is statistically significant. BSC-adopting companies outperform their representative index in the three-year post-adoption period. The effect size is d = . 40, representing a medium effect.