DOI: 10.1111/j.1475-679X.2008.00276.x Journal of Accounting Research Vol. 46 No. 2 May 2008 Printed in U.S.A. Discussion of Nonfinancial Performance Measures and Promotion-Based Incentives MICHAEL GIBBS * 1. Introduction Dennis Campbell’s paper nicely extends a small literature on the use of qualitative performance indicators for the provision of incentives. He does so by studying promotions for a sample of managers of fast-food outlets and exploiting the company’s balanced scorecard, which provides data on nonfinancial performance measures. The paper contributes to literatures in both accounting and economics on performance measurement, provision of incentives, and promotion systems. It is well known that firms often use subjective performance evaluations, such as merit rating scales, for promotion decisions. However, almost all studies of this topic focus on middle-manager settings, where good numeric performance measures are unavailable. In the sample studied by Campbell, good measures are available, including store profit. Therefore, it is somewhat more surprising to find that nonfinancial performance indicators from the balanced scorecard do appear to be a factor in promotion decisions. This suggests that nonfinancial measures have information content beyond store profit, even in predicting future store profit. This is an interesting finding, especially since the role of qualitative performance measures has been given sort shrift in both accounting and economics. ∗ Graduate School of Business, University of Chicago 333 Copyright C , University of Chicago on behalf of the Institute of Professional Accounting, 2008