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The impact of firm characteristics on management accounting
practices: A UK-based empirical analysis

Abdel-Kader, Magdy; Luther, Robert

The impact of firm characteristics on management accounting 
practices: A UK-based empirical analysis Thumbnail


Authors

Magdy Abdel-Kader

Robert Luther



Abstract

There has been sustained interest in explaining why firms adopt different management accounting practices (MAPs). This paper applies contingency theory to respond empirically to calls by Gerdin [2005. Management accounting system design in manufacturing departments: an empirical investigation using a multiple contingencies approach. Accounting, Organizations and Society 30, 99-126], Tillema [2005. Towards an integrated contingency framework for MAS sophistication: case studies on the scope of accounting instruments in Dutch power and gas companies. Management Accounting Research 16, 101-129] and Chenhall [2007. Theorizing contingencies in management control systems research. In: Chapman, C., Hopwood, A., Shields, M. (Eds.), Handbook of Management Accounting Research. Elsevier, Amsterdam.] to increase understanding of factors that explain management accounting (MA) sophistication. We examine the impact of a range of potentially contingent variables on a broad set of MAPs in a sample of companies selected from the UK's largest industry sector. The variables relate to external characteristics, organisational characteristics, and manufacturing or processing characteristics. The method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. Furthermore, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored. The results, derived from a large scale questionnaire survey, indicate that differences in MA sophistication are significantly explained by environmental uncertainty, customer power, decentralisation, size, AMT, TQM and JIT. The data confirm that customer power should be considered as an added external variable in the contingency theory paradigm. Expectations of relationships between competitive strategy, processing system complexity and product perishability, and MA sophistication were not, however, supported by the data. The improved understanding of the relationships between 10 contingency factors and MA techniques employed contributes to the further development of an integrated contingency framework explaining variations in the investment in MA. © 2008 Elsevier Ltd. All rights reserved.

Citation

practices: A UK-based empirical analysis. British Accounting Review, 40(1), 2-27. https://doi.org/10.1016/j.bar.2007.11.003

Journal Article Type Article
Publication Date Mar 1, 2008
Deposit Date Dec 10, 2010
Publicly Available Date Feb 26, 2016
Journal British Accounting Review
Print ISSN 0890-8389
Electronic ISSN 1095-8347
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 40
Issue 1
Pages 2-27
DOI https://doi.org/10.1016/j.bar.2007.11.003
Keywords Management accounting, contingency theory, food industry, customer power, product perishability, environmental uncertainty, AMT, TQM, JIT, survey
Public URL https://uwe-repository.worktribe.com/output/1014394
Publisher URL http://dx.doi.org/10.1016/j.bar.2007.11.003
Additional Information Additional Information : 9th most downloaded paper in SSRN Accounting Practice category

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