Search results

Managerial accounting education generally insists that managers should never consider sunk costs. This suggestion seems inconsistent with a common mode of thinking about future rewards: quasi-hyperbolic discounting. This paper aims to explore the conflict between sunk cost consideration and quasi-hyperbolic discounting and to illustrate when sunk cost consideration may be appropriate.

The author conducted three numerical experiments, i.e. simulated experiments based on analytical models, to demonstrate how it can be beneficial to consider sunk costs in some circumstances. All three numerical experiments assume quasi-hyperbolic discounting. First, the author tested considering sunk costs with future rewards that are certain. Second, the author tested considering sunk costs with uncertain future rewards. Finally, the author tested two different educational interventions to change decision-makers’ thought patterns.

The author found that considering sunk costs worsens decisions when there is bad news and improves them when there is good news. The author found that an educational intervention that partially dissuades managers from considering sunk costs improves decisions when bad news arrives and worsens them when good news arrives. The author also found that an educational intervention that reduces uncertainty improves decisions when bad news arrives and does not worsen these decisions when good news arrives.

The author provided numerical examples of situations in which considering sunk costs is valuable. The findings on educational interventions provide information about the tradeoffs of teaching that sunk costs should never be considered.

According to behavioral research, aspirations influence a firm's search – exploitive and explorative – for solutions that satisfy a firm's goals. Yet, such goal seeking behavior is adaptive to a firm's past experiences and not to a manager's expectations of its firm's future. A manager's expectations are often explained in terms of their confidence in future events. The purpose of this study is to address the following research question: how does a manager's confidence influence its expectations of a firm's future performance and goals; and how do these future expectations influence a firm's exploitive/explorative search?

In drawing on cognition and legitimacy research, a conceptual model was developed to explain the antecedents and outcomes of a firm's “forward-looking” aspirations. The antecedents to a firm's forward-looking aspirations are attributed to a manager's overconfidence – anchoring, confirmation and availability – biases. In using strategic legitimacy explanations, these biases introduce distinct types of forward-looking (exploitive/explorative) search that legitimize/de-legitimize a manager's forward-looking aspirations.

A key finding of this study is that it introduces a strategic decision-making process in which a firm's exploitive/ explorative search is adaptive toward its forward-looking aspirations.

This forward-looking strategic decision-making process offers research implications to understand how a firm's future goals and expectations can offer new understandings of their past experiences and traditions and explains how a manager's overconfidence biases can influence the assessment of a firm's social aspirational groups.

In addition, this study also offers practical implications in which illustrative examples are used to explain this study's forward-looking strategic decision-making process.

A distinct contribution of this study is that it introduces a forward-looking orientation that has not been previously examined the backward focus of behavioral research.

Integrated reporting (IR) promotes the disclosure of future-oriented information to enable financial stakeholders to make better-informed decisions. However, the downside to this type of disclosure is the risk to management of disclosing such future-oriented information. This paper aims to explore how IR preparers manage the risk of disclosing future-oriented information in companies’ integrated reports.

This study represents an exploratory interpretative thematic analysis of 33 semi-structured interviews with managers involved in IR in eight Sri Lankan companies representing various industries. The thematic analysis is informed by the research literature and prior studies on IR.

This paper provides evidence of various strategies to manage the risk associated with the disclosure of future-oriented information in integrated reports. These strategies include making non-specific predictions; increasing the accuracy of the predictions; linking performance management to disclosed targets, thus ensuring individual responsibility for target achievement; disclosing ex post explanations for not achieving previously disclosed targets; and linking disclosed targets to the company’s risk management procedures. However, these strategies can cause managers to provide conservative future-oriented information, rather than “best estimate” future-oriented information.

The study describes the strategies that managers use to mitigate the risks involved in disclosing future-oriented information. These strategies can provide support or raise concerns, for managers in deciding how to deal with such risks. Regulators tasked with investor protection, as well as stock exchanges interested in the transparency and accountability of listed companies’ activities should be aware of these strategies. Furthermore, the International Integrated Reporting Council (IIRC) should be interested in the implications of this study because some of the identified strategies could undermine the usefulness of integrated reports to stakeholders. This is a significant concern given that the IIRC envisages integrated reporting and thinking as vehicles that could align capital allocation and corporate behaviour with wider sustainable development goals.

The trend of future-oriented information moving from being used only in organisations’ internal management systems to being externally reported in integrated reports has implications for stakeholder groups interested in the reported targets. This study reveals management strategies that could affect future-oriented information reliability and reduce their usefulness for users of integrated reports.

This study provides unique insights into the emerging area of how managers deal with the risks involved in disclosing future-oriented IR information.

The purpose of this paper is to analyze the effect of managers’ incentive bonuses on both accrual and real earnings management.

First, the authors investigate the relationship between managers’ bonuses and both accrual earnings management (measured by a modified Jones model) and real earnings management (measured by Roychowdhury proxies). Next, the authors examine whether management has any preferences for earnings management methods to enhance its bonuses. Finally, the authors investigate the possible effects of earnings management on future operating performance. The sample consists of compositional data in the period from 2006 to 2012.

The authors find a negative relationship between real earnings management and managers’ bonuses and detect that managers prefer to use accrual earnings management to earn more bonuses. The results also show that real earnings management will reduce a firm’s performance in future periods, and on the other hand that increasing managers’ bonuses links to improvement of the firm’s future performance. The results suggest that managers are typically aware of the negative effects of real earnings management on the firm’s future performance and thus prefer to improve the firm’s performance in securing their bonuses when their ability to manage accruals is constrained.

The implications of this paper provide further evidence on how managers’ bonuses affect their discretion in using accrual and real earnings management. This finding is important to investors and regulators.

The increasing internationalisation of business and transition to a global economy are discussed, with special detail on the views of UK and Scandinavian managers as revealed by a “Management for the Future” project carried out at Ashridge Management College. Cultural factors, including national differences in management style, and readiness to learn foreign languages, can be modified by management development processes. For the international manager of the future, however, attitudes and values may also need to develop a greater openness.

This paper presents the findings from a study into managerial competence in the Scottish visitor attraction sector. It provides an insight into the range, diversity and perceived importance of current and future competences highlighting differences based on gender, age, size, level of training and location. Although the main findings reveal a focus on operation and self‐management competences, with less emphasis given to strategic competences, significant differences were exposed between those managers who operated in medium‐ and larger‐sized establishments than those in smaller sites, those who had received training for their current position as well as those who had no training and those under the age of 50. The paper concludes by discussing implications of the findings for strategic human‐resource‐development providers in Scottish tourism.

The need for management to better anticipate the future is the urgent message currently being advocated by consultants in strategic market planning. Uses a survey of high‐level managers from Fortune 1,000 corporations to illustrate the advantages of cultivating a flexible mindset concerning environmental trends and their strategic marketing implications. Reviews projected developments in the economy, technology, ecology and the social/political environments that are expected to occur by 2005. Discusses appropriate marketing responses to these trends.

The purpose of this paper is to discuss the value of scenario planning to small and medium size enterprises (SMEs), and further examine the challenges constraining the uptake of scenario planning by SMEs.

A conceptual review of the literature on scenario planning in SMEs intended to unpack and capture the possible underlying reasons accounting for the limited uptake of scenario planning by managers/owners of SMEs has informed the formulation of this paper.

The study uncovered that SMEs’ managerial mental models, SMEs’ managerial time orientation, severe resource constraints, and industry complexity are some of the salient factors inhibiting the use of scenario planning among managers/owners of SMEs. The author develops a framework of propositions that account for the complexity and challenges of scenario planning by SMEs for future empirical examination and validation.

The conventional wisdom is that scenario planning is carried out by large and established firms, and that SMEs are unable to adopt and practice the technique. This paper uncovers that SME have substantial needs for scenario planning, but are only able to engage in simple foresight activities such as brainstorming, desk research, networking and expert interviews to monitor their external environment. They are unable to effectively use scenario planning in its purest form as in large firms. By bringing together the reasons accounting for the difficulty of SMEs to practice scenario planning in its purest form as large firms do, the study therefore extends the limited discourse on scenario planning among SMEs. Implications are discussed and areas for future empirical studies provided.

The aim of this research was to ascertain the current roles and responsibilities of logistics managers in two countries, how they compare their situation with other managers and to identify the types of knowledge and experience that would assist them to develop their careers.

This paper compares the results of a postal survey of 303 Australian and 161 British logistics managers.

The study indicates that logistics managers in both countries share many similar experiences, responsibilities and perceptions of their career situations. They take considerable pride and satisfaction from these careers but recognise the need for continuing professional development in their present and future roles.

The research is limited to the respondents to the surveys. Further research in other countries including less well‐developed economies would add to the generalisation of results.

It is argued that for successful international supply chain management, there is a need to review both current and future provision in higher education and continuing professional development, in order to strengthen strategic competences and increase understanding of the significance of interdisciplinary awareness in global markets.

This paper represents the first attempt to understand the roles, responsibilities, career pathways and future needs of logistics managers in the two countries. Its results should provide guidance to top managers for the future success of the logistics function in their organisations.

Construction managers′ perceived importance regarding their present and future skills and knowledge are presented. It is demonstrated that there is overall agreement among junior, middle and senior managers as to their skills and knowledge needs, now and for the future. Skills and knowledge in organisation, human relations, communication, personnel management and operational planning are most important in the practice of construction management. Few changes are anticipated in the 1990s which will significantly alter the role of the construction manager. As international markets deregulate post‐1992, communication and computer technology will become increasingly important. It is recommended that educationalists respond to the needs of construction managers by providing courses that reflect current and future trends.