Advances in Management Accounting: Volume 21

AIMA intends to provide authors with timely reviews clearly indicating the acceptance status of their manuscripts. The results of initial reviews normally will be reported to authors within eight weeks from the date the manuscript is received. Once a manuscript is tentatively accepted, the prospects for publication are excellent. The author(s) will be accepted to work with the corresponding Editor, who will act as a liaison between the author(s) and the reviewers to resolve areas of concern. To ensure publication, it is the author's responsibility to make necessary revisions in a timely and satisfactory manner.

This volume of Advances in Management Accounting (AIMA) begins with a paper by Kerler, Allport, and Fleming on the impact of framed information and project importance on capital budgeting decisions. Recent research shows that accountants may frame information related to capital budgeting projects to be consistent with their preference for the project (e.g., accept or reject), perhaps in order to persuade management to agree with them. Psychology research consistently shows that framed information results in systematic differences in judgments. The study examines whether framed information affects capital budgeting decisions, and whether this effect is moderated by the importance of the potential project. Results from an experimental case indicate attribute frames affect capital budgeting decisions, but the effect is moderated by the importance of the decision.

Capital budgeting projects fail about as often as they succeed. Recent research shows that accountants may frame information related to capital budgeting projects to be consistent with their preference for the project (e.g., accept or reject), perhaps in order to persuade management to agree with them. Psychology research consistently shows that framed information results in systematic differences in judgments. The purpose of this study is to examine whether framed information affects capital budgeting decisions, and to examine whether this effect is moderated by the importance of the potential project. Results from an experimental case completed by 173 participants indicate attribute frames affect capital budgeting decisions, however, the effect is moderated by the importance of the decision.

Participation is a key concept in budgeting practice and research. While extant literature primarily focuses on the antecedents and modifiers of participation, here we focus on the measurement of participation.

Building on theoretical and empirical research on user involvement and influence from the information systems, decision–making, and organizational justice literature, we develop a new theoretical perspective on budgetary participation. This new perspective recognizes the complexity of participation and separates it into three dimensions: situational participation, intrinsic involvement, and influence. We provide evidence of these new insights by testing hypotheses based on the model via results from a survey.

Survey results from middle managers indicate that our three separate dimensions of budgetary participation impact motivation and satisfaction in different ways. Specifically, situational participation does not have a direct impact on either motivation or satisfaction; intrinsic involvement impacts both satisfaction and motivation; and influence impacts satisfaction, but does not impact motivation.

These new insights can enhance future budgeting research as well as help managers design participative budgeting processes to improve employee motivation and satisfaction to hopefully enhance organizational performance.

This study aims to partially replicate and extend prior escalation of commitment (e.g., Harrell & Harrison, 1994; Harrison & Harrell, 1993). It extends prior studies by examining the impact of risk propensity on managers’ project evaluation decisions. In addition, the study examines the joint effects of private information, potential for personal gain, and risk propensity on managers’ project evaluation decisions. A laboratory experiment involving 146 subjects was conducted to test the various hypotheses developed for this study. The results are consistent with prior studies, suggesting that managers exhibit a greater tendency to continue unprofitable projects under conditions of private information and potential for personal gain. Furthermore, the results reveal that managers with high risk propensity exhibit a greater tendency to commit additional resources to unprofitable projects than those with low risk propensity. The results support the proposition that high risk propensity managers who experience conditions of private information and potential for personal gain exhibit a greater tendency to commit additional resources to unprofitable projects than low risk propensity managers who experience only one or neither of these conditions.

This article makes a contribution to the conflict resolution literature by examining the effect of relative hedonic utility on budgetary conflict resolution. A lab experiment, using practicing CPAs as subjects, has been conducted to examine the effect. The literature in this field supports the implication that a person's happiness, which classical economists call hedonic utility, depends not only on the true state she (he) is in, but also on her (his) perceived state relative to the state of others. The biased perception makes a decision maker look at the state of the world more often when the state is bad than when the state is good, according to a prior research study. Although the true state of the world is split evenly between a good state and a bad one, a biased perception makes a decision maker compare herself more often to her neighboring individual when the state is bad. Accordingly, a decision maker who feels unhappy more often, while the magnitude of the pain may be the same, would exhibit a more distributive, zero-sum game type conflict resolution mode relative to another decision maker who feels unhappy less often and shows a more integrative conflict resolution mode. The test results confirmed the hypotheses. Statistically significant test results show that there are distinct effects of biased perception of individuals on budgetary conflict resolution.

This study examines the relations among management control systems (MCS), environmental uncertainty (EU), and organizational slack (OS). Given a firm's EU, managing OS requires the support of an appropriately designed MCS. Thus, for different levels of OS and EU, we examine two forms of MCS: budgetary control and performance measurement system encompassing both financial and nonfinancial measures. EU and OS were determined using archival data, and MCS data was obtained via a survey questionnaire to chief executive officers (CEOs). As hypothesized, the results show that, given firms’ EU, the two forms of control play distinct but different roles in managing OS.

This study examines the mediating influence of strategic business unit (SBU) managers’ participation in their SBU budget-setting process in the association between industrial relations risk and budget use in SBU performance evaluation.

We draw our study's motivation from the industrial relations literature and the management accounting literature. In this study, industrial relations risk refers to a firm's four interrelated workplace relations situations: (a) actions of labor unions; (b) strikes/work stoppages; (c) conflicts between labor unions, and (d) linkages of labor unions with national political parties. Data were collected using a postal survey of 55 Australian coal-mining SBUs.

Our path analysis provides support for the mediating effect of budgetary participation on the relationship between industrial relations’ risk and budget use. The implications of our research show that understanding the industrial relations factors that impact when budgets should be used and the resultant impact of using these budgets is critical for an organization.

This study adds to the limited knowledge of the interaction of accounting and industrial relations in organizations.

Behavioral aspects and positive attitudes toward the balanced scorecard (BSC) could be a determinant factor in the success of BSC implementation. In the study we use the contingency theory framework to examine whether adopting a planned strategy improves employees’ buying into the BSC and helps to maximize the benefits of BSC implementation by enhancing corporate performance. We hypothesize that employees’ attitudes and perceptions toward the implementation of the BSC are contingent upon the type of strategy the firm is employing and the suitability of deploying the BSC with this strategy in place. We use a path model that draws an association between the firm's strategy and employee attitudes toward BSC implementation and employs OLS regression to test the association between the variables. We also examine whether employees’ positive attitudes help to improve a firm's performance as proxied by the customer, internal processes, learning and innovation, and financial perspectives of the BSC. We sent a mail survey to Canadian and US firms to collect the necessary data in order to conduct this study.

Conforming to our expectations, we find that firms that carefully plan their strategic objectives are more likely to have a positive impact on their employees’ perception of the BSC. A deliberate strategy – or planned strategy – as defined by Mintzberg (1978) is associated with higher levels of BSC awareness, perceptions of BSC ease of use, perceptions of BSC usefulness, and intentions to use the BSC. We also find that higher perceptions of BSC ease of use are positively associated with aspects of a firm's performance, such as from the customer, internal processes, and learning and innovation perspectives. Hence, we conclude that firms implementing the BSC need to take into consideration that the successful implementation of the BSC requires careful planning to ensure that the firm's strategic objectives are well formulated, in agreement with BSC measures, and effectively communicated to BSC users.

Using a survey method, this study extends prior research by comparing the impact of IT integration on manufacturing financial performance under activity-based costing (ABC) and volume-based costing (VBC). The findings indicate that IT integration is significantly associated with financial performance for plants that have adopted ABC, while this relationship does not hold for plants that have adopted VBC. The findings suggest that the type of costing system can help explain contradictory findings in extant literature regarding the impact of information technology on organization's financial performance.

The topic of non-budget firms is currently of interest because of many factors including cost, morale, and functionality. Using survey findings, this study adds to that body of knowledge by exploring characteristics of firms that do not use budgets. The results from this study suggest that no-budget firms continue to plan and monitor the performance of the company through other means. Key success factors are often used to evaluate firm outcomes and to reward managers, where these factors are generally linked to the firm's strategy. The majority of the firms from this survey focus on cash flow and short-term finances as a means to plan. The primary key success factors for measuring firm performance are based on earnings and revenue. The same holds for creating links between performance and efforts as a vehicle for rewarding management. Further, whether a firm faces a stable or turbulent environment is irrelevant with respect to the choice of key success factors.