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Riccardo Giannetti, Lino Cinquini, Paola Miolo Vitali and Falconer Mitchell
The purpose of this paper is to investigate how a substantial organization gradually builds a management accounting system from scratch, changing its accounting routines by…
Abstract
Purpose
The purpose of this paper is to investigate how a substantial organization gradually builds a management accounting system from scratch, changing its accounting routines by learning processes. The paper uses the experiential learning theory and the concept of learning style to investigate the learning process during management accounting change. The study aims to expand the domain of management accounting change theory to emphasize the learning-related aspects that can constitute it.
Design/methodology/approach
The paper provides an interpretation of management accounting change based on the model of problem management proposed by Kolb (1983) and the theory of experiential learning (Kolb, 1976, 1984). The study is based on a 14-year longitudinal case study (1994‐2007). The case examined can be considered a theory illustration case. Data were obtained from a broad variety of sources including interviews, document analysis and adopting an interventionist approach during the redesign of the costing system.
Findings
The paper contributes to two important aspects of management accounting change. First, it becomes apparent that the costing information change was not a discrete event but a process of experience and learning conducted through several iterations of trial-and-error loops that extended over the years. Second, the findings reveal that the learning process can alter management accounting system design in a radical or incremental way according to the learning style of the people involved in the process of change.
Research limitations/implications
Because of the adopted research approach, results could be extended only to other organizations presenting similar characteristics. Several further areas of research are suggested by the findings of this paper. In particular, it would be of interest to investigate the links between learning styles and communication and its effect on management accounting change.
Practical implications
The paper includes implications for the management of learning during management accounting change, to improve the efficiency and effectiveness of this process.
Originality/value
This paper is one response to the call for an interdisciplinary research approach to the management accounting change phenomena using a “method theory” taken from the discipline of management to provide an explanation of the change in management accounting. In respect of the previous literature, it provides two main contributions, namely, the proposal of a model useful both to interpret and manage learning processes; the effect of learning style on management accounting routines change.
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Bill B. Francis, Xian Sun, Chia-Hsiang Weng and Qiang Wu
The aim of this paper is to examine how managerial ability affects corporate tax aggressiveness.
Abstract
Purpose
The aim of this paper is to examine how managerial ability affects corporate tax aggressiveness.
Design/methodology/approach
The study follows the work of Demerjian, Lev, and McVay (2012) and quantifies managerial ability by calculating how efficiently managers generate revenues from given economic resources using the data envelopment analysis (DEA) approach. The study uses a wide range of measures of tax aggressiveness. Firm fixed-effects regressions and a difference-in-differences approach using information regarding CEO turnover to control for endogeneity are used.
Findings
The study finds a negative relationship between managerial ability and corporate tax aggressiveness. Further tests show that this negative relationship is more pronounced for firms with higher investment opportunities or firms with more reputational concerns.
Originality/value
Given the significant costs associated with tax aggressiveness and the negative effect it can have on managerial reputation if discovered, the results suggest that more able managers invest less effort in aggressive tax avoidance activities. This study furthers the understanding of how managerial personal traits affect corporate decision-making.
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Antti Rautiainen, Toni Mättö, Kari Sippola and Jukka O. Pellinen
This article analyzes the cognitive microfoundations, conflicting institutional logics and professional hybridization in a case characterized by conflict.
Abstract
Purpose
This article analyzes the cognitive microfoundations, conflicting institutional logics and professional hybridization in a case characterized by conflict.
Design/methodology/approach
In contrast to the majority of earlier studies focusing on special health care, the study was conducted in a Finnish basic health care organization. The empirical data include 36 interviews, accounting reports, budgets, newspaper articles and meeting notes collected 2013–2018.
Findings
The use of accounting techniques in this case did not offer professionals sufficient support under conditions of conflict. The authors suggest that this perceived lack of support intensified the negative emotions toward accounting techniques. These negative emotions aggregated into incompatible professional-level institutional logics, which contributed to the lack of hybridization between such logics. The authors highlight the importance of the cognitive microfoundations, that is, the individual-level interpretations and emotional responses, in the analysis of conflicting institutional logics.
Practical implications
Managerial attention needs to be directed to accounting practices perceived as frustrating or threatening, a perception that can prevent the use of accounting techniques in the creation of professional hybrids. The Finnish basic health care context involves inconsistent political decision-making, multiple tasks, three institutional logics and individual interpretations and emotions in various decision-making situations.
Originality/value
This study develops microfoundational accounting research by illustrating how individual-level cognitive microfoundations such as dissatisfaction with budgeting, aggregate into professional-level institutional logics, and in our case, prevent professional hybridization in a basic health care setting characterized by conflict and three separate institutional logics.
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Mohammad Tayeh, Rafe’ Mustafa and Adel Bino
This study investigated the impact of corporate ownership structure on agency costs in the insurance industry.
Abstract
Purpose
This study investigated the impact of corporate ownership structure on agency costs in the insurance industry.
Design/methodology/approach
The study sample included 23 insurance companies listed on the Amman Stock Exchange (ASE) from 2010 to 2019. Panel regression was used to account for the firm- and time-specific unobservable variables and system-GMM estimation was used to address endogeneity concerns.
Findings
The results show that managerial ownership positively (negatively) affects selling, general and administrative (SG&A) expenses (assets turnover), implying that unmonitored managers engage in activities that serve their own interests rather than those of shareholders. The largest shareholder's ownership has no impact on agency costs, implying that the ownership of the largest shareholder is irrelevant. However, as the wedge between the percentage of capital owned by the largest shareholders and managers increases, SG&A expenses (efficiency ratio) decrease (increases), indicating that the existence of large non-management shareholders reduces agency costs. After accounting for the endogeneity problem, the impact of ownership structure on agency costs measured by asset turnover remains robust.
Originality/value
To the best of the authors' knowledge, this study is the first to provide unique evidence and useful insights into the determinants of agency costs from a frontier market in the Middle East and North Africa (MENA), with a focus on the insurance sector. Additionally, this study uses a new measure of separation between ownership and control by calculating the wedge between managers' and large shareholders' ownership.
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Pierre Jinghong Liang, Madhav Rajan and Korok Ray
This paper aims to explore the design of management teams when the critical task facing individual managers is monitoring the performance of worker teams and producing performance…
Abstract
Purpose
This paper aims to explore the design of management teams when the critical task facing individual managers is monitoring the performance of worker teams and producing performance measures under uncertain information environments.
Design/methodology/approach
The authors use a multi-agent LEN framework – linear contract, exponential utility and normal density – to model the incentive provision and organizational design.
Findings
The main lesson is that the use of performance measures under uncertainty is greatly affected by the potential for free-riding in the very monitoring activities which generate the measures to begin with. Accordingly, the value of having a management team, that is the incremental benefit of having a second manager, depends on the monitoring technology. Of particular importance are the potential free-riding in monitoring effort among multiple managers and synergies gained from having more than one manager, such as correlation among the performance measures produced or improvement due to splitting workers pool into separate groups for each manager to monitor separately.
Originality/value
The paper pushes this line of research further by explicitly modeling the endogenous process of signal generation within a rich economic environment. In this environment, number of workers being evaluated and number of managers who produce the signals are both endogenous. Furthermore, both workers and managers are subject to moral hazard problem. In particular, the managers suffer from potential free-riding problems but may benefit from synergistic forces due to team monitoring.
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Gustaf Kastberg Weichselberger and Cristian Lagström
The authors argue that the mainstream scholarly discourse on hybridity and accounting is thus far primarily interested in the use and effects of accounting “in” hybrid…
Abstract
Purpose
The authors argue that the mainstream scholarly discourse on hybridity and accounting is thus far primarily interested in the use and effects of accounting “in” hybrid organizations. Consequently, the literature has to a lesser extent explored how accounting mediates hybrid settings (while also being mediated), and the role of disentanglements in such processes. In hybrid settings, objects are difficult to define, and measures and tools difficult to agree upon. However, the literature on hybrid accounting is inconclusive and indicates that accounting can potentially both stabilize and de-stabilize relations in a hybrid setting. The authors address the research question of how accounting emerges and manifests itself in a process of entangling and disentangling in a heterogeneous emerging hybrid setting.
Design/methodology/approach
The paper is based on a longitudinal qualitative case study of the implementation of social investments, a public sector calculative framework based on the logic of measuring long term and social and economic impact of prevention. Methodologically, the study was guided by actor-network theory. In total, 18 observations and 48 interviews were conducted.
Findings
The observation the authors make in their case study is that much effort was spent on both keeping things apart and tying elements together. What the authors add to the literature is an illumination of how the interplay between entanglements and disentanglements facilitated the design idea of social investments to be enacted as multiple semi-integrated and purified hybridizations. The authors describe different translation points, each representing a specific hybridization where elements were added, recombined and disentangled. Still, the translation points were not completely compartmentalized, but rather semi-integrated where associations were facilitated through active mediation, likeness and productiveness for each other.
Research limitations/implications
One limitation is the single case approach. A second limitation arises from the ANT approach to hybridity.
Practical implications
A practical implication of this paper is that in hybrid settings, the semi-integrated character may be interpreted as a strength because it allows the mobilization of heterogenous actors. However, this may also come at the cost of governability and raises further questions of managerial practices in hybrid settings.
Social implications
The paper suggests the potentially productive role of disentanglements in allowing multiple hybridizations to evolve in hybrid accounting settings.
Originality/value
The paper suggests the potentially productive role of disentanglements in allowing multiple stabilized hybridizations to evolve in hybrid accounting settings.
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Simon Lundh, Karin Seger, Magnus Frostenson and Sven Helin
The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.
Abstract
Purpose
The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.
Design/methodology/approach
This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.
Findings
The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.
Originality/value
The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.
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