Implementing Performance Measurement Innovations: Evidence From Government

Using data from a government-wide survey administered by the US General Accounting Office, we examine some of the factors influencing the development, use, and perceived benefits of results-oriented performance measures in government activities. We find that organizational factors such as top management commitment to the use of performance information, decision-making authority, and training in performance measurement techniques have a significant positive influence on measurement system development and use. We also find that technical issues, such as information system problems and difficulties selecting and interpreting appropriate performance metrics in hard-to-measure activities, play an important role in system implementation and use. The extent of performance measurement and accountability are positively associated with greater use of performance information for various purposes. However, we find relatively little evidence that the perceived benefits from recent mandated performance measurement initiatives in the US government increase with greater measurement and accountability. Finally, we provide exploratory evidence that some of the technical and organizational factors interact to influence measurement system implementation and outcomes, often in a complex manner

Alternative Information Sources and Information Asymmetry Reduction: Evidence From Small Business Debt

We examine whether more sophisticated accounting methods (in the form of accrual accounting) interact with other information sources to reduce information asymmetries between small business borrowers and lenders, thereby lowering borrowers׳ probability of loan denial and cost of debt. We find that higher third party credit scores, but not the use of accrual accounting, decrease the likelihood of loan denial. However, firms using accrual accounting exhibit statistically lower interest rates after controlling for many factors associated with the cost of debt. Further, the interest rate benefits from accrual accounting are greatest when the borrower׳s credit score is low and/or the length of its banking relationship with the lender is short. This evidence indicates that accrual accounting can benefit small business borrowers, but that the information contained in third-party credit scores and obtained through ongoing banking relationships can substitute for the incremental information provided by accrual accounting

Competition, Small Business Financing, and Discrimination: Evidence from a New Survey

We analyze credit applications, loan denials, and interest rates paid by small businesses across owner gender, race, and ethnicity. In addition, we examine data from owners who said they did not apply for credit because they believed that their applications would have been turned down. After controlling for a rich set of explanatory variables, including personal and business credit histories, substantial differences in denial rates between firms owned by African Americans and white males remain. Moreover, consistent with Becker's classic theories (1957), we find evidence that increases in competition in the firm's local banking market reduces these differences.