The domination of financial accounting on managerial accounting information: An empirical investigation in the UAE

Abstract

Purpose

The purpose of this paper is to examine Johnson and Kaplan's claim that “external reporting influences managerial accounting information” in an emerging capital market, the United Arab Emirates (UAE).

Design/methodology/approach

The paper relies on a survey instrument and institutional theory analysis in order to: first, explore accountants' perceptions of the extent to which financial accounting conventions‐based information is utilized, instead of managerial accounting information, in internal decision making; and second, articulate respondents' perception to the UAE's wider social and institutional context expressed in terms of accounting regulars, accountancy profession and partnership with multinational companies.

Findings

In line with Johnson and Kaplan's claim and contrary to the studies of Hopper et al., Joseph et al. and Scapens et al., the paper's findings show evidence of financial reporting domination on managerial accounting information in the UAE. Locating such results in a UAE companies social and institutional context, the paper reveals that the activities of regulators and accountancy professionals pay more attention to financial reporting, an issue which contributes towards reinforcing respondents' general perceptions that management accounting is subservient to the demands of financial reporting requirements.

Research limitations/implications

Although the paper's findings trigger the importance of the UAE's institutional context in reinforcing accountants' perceptions, the interaction between financial accounting requirements and managerial accounting information is an area that needs further in‐depth case‐study‐based investigation in emerging market economies.

Practical implications

The paper's findings highlight the type of information that UAE's managers utilize when making decisions. These findings are in the interest of business investors and the accountancy profession that aims at increasing practitioners' professional knowledge.

Originality/value

This is one of few papers that combine survey results and institutional theory analysis to explore whether financial accounting dominates managerial accounting information and, at the same time, provides an understanding of the underlying reasons behind that domination in an emerging market economy such as the UAE.

Citation

Saadi Halbouni, S. and Kamal Hassan, M. (2012), "The domination of financial accounting on managerial accounting information: An empirical investigation in the UAE", International Journal of Commerce and Management, Vol. 22 No. 4, pp. 306-327. https://doi.org/10.1108/10569211211284502