Review of Accounting Studies

, Volume 19, Issue 2, pp 988–1008 | Cite as

Fishing for excuses and performance evaluation

  • Francois Larmande
  • Jean Pierre Ponssard


We study a principal–agent model in which the agent can provide ex post additional relevant information regarding his performance. In particular, he can provide a legitimate excuse, that is, evidence that a poor result is only due to factors outside his control. However, building a convincing case requires time, time that is not spent on exerting productive effort and thus generating information represents an opportunity cost. We obtain necessary and sufficient conditions for the principal to prefer a policy of adjusting ex post the performance measure for the information provided by the agent to a policy of conforming to a result-based system with no adjustments. The risk aversion and a possible limited liability of the agent play an important role in the analysis. This paper clarifies the issues associated with the so-called “excuse culture” prevailing in some organizations.


Performance measurement Manipulation Controllability principle Excuse culture Influence activity 

JEL Classification

D82 M41 M52 



We thank Anil Arya, Stanley Baiman (the editor), Hans Frimor, and workshop participants at the 2010 Workshop on Accounting and Economics in Vienna, at the GATE in Lyon, and two anonymous referees for helpful comments. Jean-Pierre Ponssard gratefully acknowledges the support from the chair FDIR (Finance Durable et Investissement Responsable).


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.EMLYON Business SchoolEcullyFrance
  2. 2.CNRS and Ecole polytechniquePalaiseauFrance

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