The impact of top management team characteristics and historical financial performance on strategic management accounting

2018 ◽  
Vol 14 (4) ◽  
pp. 455-472 ◽  
Author(s):  
Odysseas Pavlatos ◽  
Xara Kostakis
Keyword(s):  
Financial Performance ◽  
Role Theory ◽  
Management Accounting ◽  
Top Management Team ◽  
Financial Statements ◽  
Management Control ◽  
Content Type ◽  
Strategic Management Accounting ◽  
The Impact ◽  
First Time

PurposeThe purpose of this paper is to explore the impact of the top management team (TMT) characteristics and historical financial performance on strategic management accounting (SMA) usage.Design/methodology/approachObjective data were extracted from annual financial statements, as well as data from questionnaires in a sample of 94 enterprises were used.FindingsData analysis showed that one of the most important factors that influence the level of usage of SMA techniques is lagging historical performance of the enterprises. Those organizations that had low profitability in the past, due to the economic crisis, adopted and used innovative SMA tools more extensively, to improve their financial performance in the future. Based on Upper Echelons theory and Role theory, it was found that TMT characteristics (educational background, tenure, creativity) affect the adoption and the usage of SMA tools.Research limitations/implicationsFirst, this research was performed on one sector. Second, only a few SMA techniques were included. Third, some TMT characteristics were measured with only one item. As a result, it was not possible to check for reliability and validity of the measurements.Practical implicationsFirst, TMT characteristics influence the decision-making process and management control. This should be taken into account during the process of the selection of top managers. Moreover, SMA tools can be effectively used not only by CEOs and the managers of the accounting department, but from marketing managers as well. Consequently, a better communication between marketing and accounting managers is deemed essential to improve the performance of the company.Originality/valuePrevious research has studied the effect of CEOs and CFOs characteristics in the design of Management Control Systems. The authors explored for the first time, the effect of the characteristics of one more member of Board of the TMT, that is, Chief Marketing Officer (CMO), in the adoption and use of management accounting innovations (MAIs). Second, the authors studied one more characteristic of top level managers from Role theory, that is, creativity. Although many studies link creativity to the adoption of MAIs, this is the first time, to the best of the authors’ knowledge, that creativity is studied as an additional parameter that influences the adoption and use of SMA. Furthermore, this research provides additional knowledge about the effect of historical performance in MAIs usage. For the first time, it used objective data from annual financial statements, it calculated financial ratios, to measure historical financial performance. Moreover, this study provides knowledge about the effect of TMT characteristics in accounting choices in geographical areas, outside the USA.

Association between strategic management accounting facets and organizational performance

2019 ◽  
Vol 14 (2) ◽  
pp. 212-234 ◽  
Author(s):  
Ahmad Mohammed Alamri
Keyword(s):  
Strategic Management ◽  
Financial Performance ◽  
Organizational Performance ◽  
Organizational Context ◽  
Stock Exchange ◽  
Management Accounting ◽  
Data Set ◽  
Content Type ◽  
Strategic Management Accounting ◽  
The Impact

Purpose The purpose of this paper is to develop an extensive conceptualization of strategic management accounting (SMA) facets, as well as to explore the impact of these facets on both financial and non-financial measures of organizational performance (OP). Design/methodology/approach Data are collected from 435 accounting managers working in Saudi companies listed in the Saudi Stock Exchange. The study applies hierarchical regression analysis to test the association between SMA facets and OP. Findings The results show that SMA facets significantly affect OP, assessed in the two major categories of financial and non-financial performance. Research limitations/implications The dominance of companies listed in the Saudi Stock Exchange in the data set limits the generalizability of the findings. Practical implications The present study supports the idea that companies can enhance their OP by adopting some facets of SMA such as the availability of appropriate structural arrangements, supportive resources, adequate information types and usages and good organizational climate. Originality/value The current study expands the conceptualization of SMA in light of organizational context as a set of facets to overcome the polarization found in the existing literature and explores their impact on OP, including non-financial performance, for which empirical evidence is still scant.

Organizational lifecycle and strategic management accounting

2019 ◽  
Vol 15 (4) ◽  
pp. 580-604 ◽  
Author(s):  
Timur Pasch
Keyword(s):  
Strategic Management ◽  
Management Accounting ◽  
Development Stage ◽  
Management Control ◽  
Content Type ◽  
Performance Effect ◽  
Life Cycle Stages ◽  
Strategic Management Accounting ◽  
German Speaking ◽  
Organizational Lifecycle

Purpose This study aims to examine the relationship between organizational lifecycle stages, the adoption of strategic management accounting (SMA) practices and the performance consequences of SMA adoption. Design/methodology/approach The analysis is based on survey data from 377 firms operating in German speaking countries. Findings The author finds that the firms’ adoption rates of SMA increase from the birth to the revival lifecycle stages and drop at the decline stage. Firms that deviate from the optimal SMA profile have lower performance compared to the firms that do not deviate. The negative performance effect, however, is only significant for firms that have too little SMA practices and is not significant for firms that adopt too much SMA practices. Research limitations/implications These results suggest that firms that fail to implement a sufficient level of SMA suitable for their development stage will not develop as fast as their competitors. This study is subject to general limitations of survey research, particularly with respect to the operationalization of the variables, the number of contextual variables in the empirical model and sample coverage. Practical implications The implication for managerial practice is that greater efforts should be directed toward eliminating underfit than overfit regarding the implementation of management control systems. Originality/value This is the first analysis of the adoption of SMA at different life cycle stages and the consequences of misfitted adoption.

The indirect effect of strategic management accounting in the relationship between CEO characteristics and their networking activities, and company performance

2017 ◽  
Vol 13 (4) ◽  
pp. 471-491 ◽  
Author(s):  
Abolfazl Amanollah Nejad Kalkhouran ◽  
Bahareh Hossein Nezhad Nedaei ◽  
Siti Zaleha Abdul Rasid
Keyword(s):  
Strategic Management ◽  
Indirect Effect ◽  
Management Accounting ◽  
Chief Executive ◽  
Company Performance ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Strategic Management Accounting ◽  
The Impact ◽  
Ceo Characteristics

Purpose The purpose of this paper is to investigate the effect of chief executive officer (CEO) characteristics and involvement in networks on strategic management accounting (SMA) and, in turn, the indirect effect of SMA on company performance. Design/methodology/approach A model is advanced and tested using partial least-squares path modelling and data were collected from a sample of 121 service small and medium-sized enterprises (SMEs) in Malaysia. Findings The results indicate significant and positive relationships between the CEO education and the application of SMA as well as between involvement in networks and SMA. Moreover, it is found that SMA has an indirect effect in relations of CEO education, involvement in networks and company performance. Practical implications SMEs’ leaders may realize their important role in affecting outcomes by their choices, which are in turn affected by their characteristics and activities. Originality/value This study provides an empirical evidence on the impact of two new factors on the SMA by considering contingency theory and upper echelons theory simultaneously for explaining relationships and developing a new model.

scholarly journals Pengaruh Strategic Management Accounting dalam Memediasi Pengaruh Orientasi Pasar, dan Kualitas Pimpinan terhadap Kinerja Keuangan

2021 ◽  
Vol 7 (2) ◽  
pp. 100-108
Author(s):  
Christina Verawaty Situmorang ◽  
Arthur Simanjuntak
Keyword(s):  
Strategic Management ◽  
Financial Performance ◽  
Market Orientation ◽  
Management Accounting ◽  
Leadership Qualities ◽  
Leadership Quality ◽  
Descriptive Research ◽  
Strategic Management Accounting ◽  
Quantitative Descriptive ◽  
The Impact

The aim of the study is to identify and analyze the impact of strategic management accounting, which mediates market orientation and leadership qualities to financial performance.  This research is quantitative descriptive research. Researchers use quantitative descriptive research to uncover the truth about the study's problems. Bbased on the facts and information available obtained directly from the respondent. The types of data used are primary and supporting data. The main data is obtained from respondents with direct interviews of competent respondents. Supporting data isobtained from dokumen Hotel in Medan City. The method used in data collection in the form of interviewing informants who are sources is hotel managers up to employees who work for at least 3 years. The population of this study is all hotels based on the criteria of three-, four- and five-star hotels in the city of Medan and have been established for at least   5 years. The method used is metode purposive sampling, with the number of samples obtained as many as 64 respondents. Based on the results of the study, partially Market Orientation affects Financial Performance through Strategic Management Accounting. And The Quality of Leaders influences Financial Performance through Strategic Management Accounting. Simultaneously Market Orientation and Leadership Quality have a significant effect on Financial Performance. And Market Orientation and Leadership Qualities Affect Financial Performance Through Strategic Management Accounting.

Do frequent acquirers outperform in cross-border acquisitions? A study of Indian companies

2020 ◽  
Vol 30 (4) ◽  
pp. 491-514
Author(s):  
Samta Jain ◽  
Smita Kashiramka ◽  
P.K. Jain
Keyword(s):  
Operating Performance ◽  
Financial Statements ◽  
Acquisition Performance ◽  
Content Type ◽  
Acquisition Period ◽  
Cross Border ◽  
Acquiring Firms ◽  
The Impact ◽  
First Time

Purpose The purpose of this paper is to examine the impact of cross-border acquisitions (CBAs) on the financial and operating performance of acquiring firms from emerging economies in the long-term; the acquiring firms have been segregated into frequent (multiple) and first-time (single) acquirers based on their prior cross-border experience. The intent is to identify if overseas activities bring over and above advantage to multiple acquirers in terms of enhanced financial synergies and reduced costs, motivating them to engage in sequential international transactions. Design/methodology/approach The paper analyses the impact of CBAs announced and completed during 2004–2013 by Indian companies listed on the NIFTY 500 index. The post-acquisition financial and operating performance of Indian cross-border acquirers has been compared with their pre-acquisition performance. The average performance over three-years immediately preceding the acquisition year constitutes the benchmark for the post-acquisition performance. The post-acquisition period includes a year of integration followed by three successive post-integration years. Therefore, in operational terms, the research period extends from 2001–2017. The long-term performance of frequent (multiple) and first-time (single) Indian acquirers has been investigated comprehensively using a set of 16 financial ratios. The performance has been assessed using the secondary data collected from financial statements of acquiring companies; the financial statements and the list of CBAs by Indian companies have been obtained from Thomson Reuter’s EIKON database. Findings The financial and operating performance of frequent as well as first-time acquirers have depicted a similarly deteriorating trend during the post-acquisition period. These findings indicate that the international expansion of Indian companies is not guided by synergy creation potential and may be pushed by the overconfidence or over-optimism and agency conflicts of managers. This, perhaps, indicates that firms are being imprudent in investing free cash flows available with them. Originality/value The study is the first of its kind. No study, to the best of the authors’ knowledge, has analysed the performance of acquiring firms by segregating them into frequent and first-time acquirers using accounting measures of performance. More so, an extensive analysis of the long-term financial and operating performance of acquiring companies is rare to come across in the extant literature.

Contextual factors moderating the impact of strategic management accounting on competitive advantage

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Babajide Oyewo
Keyword(s):  
Competitive Advantage ◽  
Market Orientation ◽  
Management Accounting ◽  
Contextual Factors ◽  
Strategy Formulation ◽  
Content Type ◽  
Strategic Management Accounting ◽  
Deliberate Strategy ◽  
The Impact ◽  
The Relationship

PurposeThis study investigates the influence of six interrelated contextual factors, namely organisational structure, quality of information technology, business strategy in terms of deliberate strategy-formulation, market orientation, market competition and perceived environmental uncertainty (PEU), on the usage intensity of innovative management accounting techniques commonly referred to as strategic management accounting (SMA); the impact of SMA usage on competitive advantage; and the moderating influence of the contextual factors on the relationship between SMA usage and competitive advantage.Design/methodology/approachSurvey data were obtained through a structured questionnaire from publicly listed manufacturing companies on the main board of the Nigerian Stock Exchange (NSE). Ordinary least squares (OLS) regression and moderated regression were used to analyse data. Both exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were used to examine the validity and reliability of variables as first and second order of analysis. Structural equation modelling (SEM) (maximum likelihood estimation method) was applied to assess the robustness of result.FindingsMarket orientation and deliberate strategy-formulation emerged as significant determinants of SMA usage intensity. Although there is a significant relationship between SMA usage and competitive advantage, the strength of the relationship is moderate. Organisational structure, deliberate strategy-formulation and PEU significantly moderate the relationship between SMA usage and competitive advantage.Research limitations/implicationsThe emergence of deliberate strategy-formulation, as both a significant predictor of SMA usage intensity and as the strongest moderator of the relationship between SMA usage and competitive advantage, establish that it is organisations that take a proactive approach to strategy issues that may derive the most benefit from SMA utilisation.Practical implicationsThe result from this study brings to fore the need to involve management accountants in strategy-formulation and implementation in order to leverage their competence in deploying SMA techniques to enhance organisational competitiveness.Originality/valueThe current study is the first, to the researcher's knowledge, to specifically examine interrelated contextual factors distinctively affecting SMA usage and organisational competitiveness in a developing country. Whilst these six factors have been stressed as important determinants of the adoption of innovative management accounting techniques, the study provides empirical evidence on the extent to which they exert on SMA. The study presents empirical evidence on the relevance of market orientation—a construct which has surprisingly received little research attention in management accounting literature—as a variable which could affect the adoption of management accounting innovation.

Risk-based management control resistance in a context of institutional complexity: evidence from an emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdelmoneim Bahyeldin Mohamed Metwally ◽  
Ahmed Diab
Keyword(s):  
Emerging Markets ◽  
Management Accounting ◽  
Management Control ◽  
Insurance Companies ◽  
Research Approach ◽  
Cultural Symbols ◽  
Content Type ◽  
Enterprise Risk ◽  
Traditional Work ◽  
The Impact

Purpose The purpose of this study is to examine the impact of competing logics on the implementation of risk-based management controls (RBMC) by providing evidence of resistance due to competing logics. Moreover, the study proposes solutions to logic contestation. These solutions may help the company override logic complexity. Design/methodology/approach This study draws upon the theory of institutional logics. It adopts an interpretative qualitative research approach and uses the case study method. Data were collected from one of the biggest private sector insurance companies in Egypt through a triangulation of interviews, observations and documents. Findings We found that internalised and institutionalised roles and structures – represented by the incumbent corporate and community-related sets of logics – compete and disrupt the emerging enterprise risk management and RBMCs. The newly imposed RBMCs produced heterogenic practices that changed the means of controls at the case company. However, this change was faced by resistance from local employees, as it represented a challenge to the prevailing cultural symbols and norms in their traditional work environment. Originality/value This study contributes to the literature by offering new evidence on resistance to Western risk-based management control projects applied in emerging markets. Moreover, it extends the cultural political economy of management accounting and control by illustrating that management accounting in emerging markets is also an operational manifestation of culture, community and location.

Effect of digital banking-related customer experience on banks’ financial performance during Covid-19: a perspective from Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nhung Thi Hong Nguyen ◽  
Nguyen Kim-Duc ◽  
Teresa Lien Freiburghaus
Keyword(s):  
Customer Satisfaction ◽  
Financial Performance ◽  
Positive Impact ◽  
Financial Statements ◽  
Customer Experience ◽  
Moderator Variable ◽  
Content Type ◽  
Considerable Impact ◽  
Intermediate Variables ◽  
The Impact

Purpose This study aims to investigate customer experience (CE) and its relationship with intermediate variables to analyze the impact of digital banking (DB) on banks’ financial performance (FP) before Covid-19 and during the lockdown in Vietnam. Design/methodology/approach These research data are from a survey of Vietnamese customers. The survey was deployed to a sample of 238 and 218 customers of 20 Vietnamese commercial banks via email in 2018Q4 and 2020Q2, respectively. FP is measured using banks’ quarterly financial statements before Covid-19 and during the lockdown. Findings CE with DB had a significant and positive impact on FP via customer satisfaction before Covid-19, while the other two intermediate variables (word-of-mouth [WoM] and trust) had no considerable impact. During the lockdown, only WoM had a positive impact on FP. These findings indicate that before Covid-19, when customers could easily interact with their bank through many touchpoints, customer satisfaction with DB services created higher FP for the bank. However, during the lockdown, DB became the customer’s main touchpoint and WoM mediated the CE–FP relationship. Originality/value During the national lockdown from the beginning of the Covid-19 pandemic in January 2020, customers in Vietnam may have had different experiences with DB when no alternate modes of payment were available. The study uses Covid-19 as a moderator variable to offer different viewpoints and findings related to CE with DB and its impact on FP.

scholarly journals The impact of SFAS 157 on fair value accounting and future bank performance

2020 ◽  
Vol 28 (4) ◽  
pp. 739-757
Author(s):  
Dimu Ehalaiye ◽  
Mark Tippett ◽  
Tony van Zijl
Keyword(s):  
Financial Performance ◽  
Predictive Value ◽  
Financial Statements ◽  
Fair Value ◽  
Cash Flows ◽  
Content Type ◽  
Sfas 157 ◽  
Future Performance ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate whether levels-classified fair values of US banks based on SFAS 157: Fair Value Measurements, as recognised in the quarterly financial statements of the banks over the period from 2008 until 2015, have predictive value in relation to the banks’ future financial performance measured by operating cash flows and earnings over a three-quarter horizon period. In addition, we consider whether the global financial crisis (GFC) impacted the relationship between SFAS 157–based levels‐classified fair values and bank future financial performance. Design/methodology/approach We develop hypotheses connecting the net levels-classified bank fair values based on SFAS 157 with banks’ future financial performance. We test the hypotheses by estimating three-period quarters’ ahead forecasting models. We also use these models to test for the impact of the GFC on the relationship between the fair values and future financial performance. Findings Our findings suggest that the levels-classified net fair values based on SFAS 157 have predictive value in relation to future cash flows for banks. There is significant variation, across the levels, in the predictive value of levels-classified net fair values for future performance. Our findings indicate that the GFC has limited impact on the predictive value for cash flows, but the GFC had a significant adverse impact on earnings, and, with allowance for the effect of the GFC, the Level 2 net fair values have predictive value for the future earnings. Originality/value The study provides the first direct empirical evidence on the relationship between the SFAS 157 levels-classified quarterly bank fair values recognised in publicly available financial statements and banks’ future performance. Our results are consistent with the findings from earlier research (Ehalaiye et al., 2017) using annual data disclosed in the supplementary notes to the financial statements of US banks based on SFAS 107. The study, makes a significant contribution to the question of frequency of reporting and to the disclosure vs recognition debate. The study has implications for policy makers, regulators and accounting standards setters such as the Securities and Exchange Commission and the Financial Accounting Standards Board in evaluating the use of fair value measurement in financial reporting.

Financial performance and operating strategies of Malaysian property development companies during the global financial crisis

2017 ◽  
Vol 22 (2) ◽  
pp. 174-191 ◽  
Author(s):  
Toong Khuan Chan ◽  
Abdul-Rashid Abdul-Aziz
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Global Financial Crisis ◽  
Financial Statements ◽  
Growth Strategies ◽  
Property Development ◽  
Operational Strategies ◽  
Content Type ◽  
Operating Strategies ◽  
The Impact

Purpose The purpose of this paper is to characterise the financial performance and to identify the operating strategies of property development companies in Malaysia during the 2008 global financial crisis (GFC). Design/methodology/approach The research approach includes a comprehensive analysis of the financial statements and annual reports of 35 property development companies listed on the Kuala Lumpur stock exchange. The financial statements were analysed to evaluate the financial performance of these companies and to assess the severity of the impact of the GFC on revenues and profits. The operating strategies were determined from a content analysis of the statement to shareholders. Findings An aggregated analysis of the financial performance indicates a 23 per cent decline in net profit in 2008. Classifying these companies into two separate sets of distressed and non-distressed companies showed that poor financial performance and a high debt-to-equity ratio pre-GFC led to continuing poor performance during the GFC period and beyond. Survival strategies adopted by distressed companies include the disposal of assets to improve cash flow, refinancing loans, delaying the launch of new projects and reducing their workforce. Non-distressed companies adopted growth strategies such as purchasing land for development, focusing their offerings towards high-end products, vertically integrating and diversification. Practical implications The increased understanding of the financial performance and operational strategies will allow managers of property development companies to improve financial management and adopt appropriate strategies in response to the impact of future financial distress. Originality/value The study presented in this paper is the first to analyse the financial performance of Malaysian public-listed property development companies during the period of the 2008 GFC and to link their financial performance to operational strategies.

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