Budget Development and Use in Small‐ and Medium‐Sized Enterprises: A Field Investigation

We examine the process by which operating budgets are developed and how they are used for control, evaluation, and reward purposes in small‐ and medium‐sized enterprises (SMEs). SMEs (i.e., fewer than 500 employees) represent the dominant organizational form in North America but surprisingly little research has examined how these companies develop and use management controls. Our study focuses on a key element of the management control system, operating budgets, because prior research on SMEs indicates this as an important and commonly used control tool in such companies. Prior research on budgeting practices, while extensive, has almost exclusively examined larger companies. We conduct in‐depth field interviews at 12 participating SMEs to address four theory‐based research questions intended to provide insights regarding the development and use of budgets by SMEs. Our first question examines how budgets are developed, top‐down versus collaborative. Our second, third, and fourth research questions examine, respectively, whether budgets are used tightly or loosely for results control, performance evaluation, and reward purposes. As a first step in providing a deeper understanding of budget development and use in SMEs, our results have implications for practice, theory development, and management accounting education.     

Does bank market power affect SME financing constraints?

This paper examines the extent to which bank market power alleviates or magnifies SME credit constraints using a large panel dataset of more than 118,000 SMEs across 20 European countries over the period 2005–2008. To our knowledge, this is the first study to examine bank market power and SME credit constraints in an international, developed economy setting. Moreover, our study is the first to address a number of econometric considerations simultaneously, in particular by controlling for the availability of profitable investment opportunities using a structural Q model of investment. Our results strongly support the market power hypothesis, namely, that increased market power results in increased financing constraints for SMEs. Additionally, we find that the relationship exhibits heterogeneity across firm size and opacity in a manner that suggests that the true relationship between bank market power and financing constraints might not be fully explained by the existing theory. Finally, we find that the effect of bank market power on financing constraints increases in financial systems that are more bank dependent.     

SME Reporting in Australia: Where to Now for Decision‐usefulness?

This paper develops recommendations for simplified decision‐useful SME financial reporting in Australia – a country that has traditionally allowed a wide range of reporting standards to be used by these entities. Drawing on interviews and comment letters from a number of stakeholders, and data from a survey of users of financial statements of non‐publicly accountable unlisted entities, we analyse stakeholder arguments for and against SMEs providing less detailed reports, and identify the line items that might be most useful to users for decision making.     

The global financial crisis and the capital structure of firms: Was the impact more severe among SMEs and non-listed firms?

Using a dataset covering about 276,998 firms across 75 countries over the period 2004–2011, this paper examines the short-run evolution of firms' capital structures following the start of the global financial crisis and its immediate aftermath, comparing the experience of already levered SMEs, large non-listed firms, and listed companies. We find that firm leverage and debt maturity declined both in advanced economies and in developing countries, even in those that did not experience a crisis. The deleveraging and maturity reduction were particularly significant for non-listed firms, including both SMEs as well as large non-listed companies. For SMEs, these effects were larger in countries with less efficient legal systems, weaker information sharing mechanisms, less developed financial sectors, and with more restrictions on bank entry. In contrast, there is weaker evidence of a significant decline in leverage and debt maturity among listed companies which are typically much larger than other firms and likely to benefit from the “spare tire” of easier access to capital market financing. Though our results are robust to many changes in sample and specification, we cannot rule out that survivorship bias and attrition could affect our estimates to some degree.     

小微企业正规融资效果研究——基于匹配模型的估计

正确评价小微企业正规融资的效果,不仅有利于缓解小微企业“融资难”问题,对制定小微企业信贷相关支持政策也具有重要意义。本文基于四川省小微企业信贷调查数据,从盈利和就业两个角度,以匹配方法估计了正规融资对小微企业的影响。结论表明:第一,小微企业有效信贷需求已较好满足,简单认为“融资难”并不准确;第二,正规融资使小微企业各项利润指标得到不同程度改善,这在一定程度上说明小微企业正规融资是可持续的。另一方面,短期内正规融资并未促进小微企业就业增加。第三,分行业看,正规融资对小微企业就业增加的抑制作用主要体现在制造业,而服务业和其他行业无明显影响。     

An analysis of majority owner‐managed companies in the UK

This paper investigates the characteristics of 73 UK companies in which managers have an ownership stake of greater than 50 per cent. We find that majority owner‐managed companies make less use of alternative corporate control systems and are less likely to remove their chief executive officer or other board members following poor performance. However, our sample firms actually outperform diffusely held companies of similar size in the same industry. The determinants of majority control appear more closely related to the characteristics of the controlling shareholders rather than the firm's operating environment. Changes in the ownership structure of our sample companies owe more to changes in owner‐specific characteristics and security issuance than they are related to changes in the company's operating environment or company performance. We conclude that despite the obvious agency costs of managerial entrenchment for closely held companies, for the present sample at least the incentive alignment benefits of large director shareholdings are beneficial to outside shareholders.     

Book Reviews

This paper describes and explains the use of political risk assessment techniques in Jordanian multinational corporations (MNCs). A multi‐method approach to collect data was followed. A self‐report questionnaire was delivered by hand to the general managers of all Jordanian MNCs which were identified as operating internationally. Semi‐structured interviews were used as a means of elaborating on the findings from the questionnaire. The study identified the extensive use of heuristic political risk assessment techniques (due to their flexibility, simplicity and low cost). Scientific techniques, on the other hand, were used by only a minority of MNCs. As has been the case in earlier studies, flexibility, simplicity and cost considerations were all found to be influential in this regard. However, the study also found that key decision‐makers in Jordanian MNCs believe that official data are subject to censorship and are therefore not reliable. This undermines the efficiency of using highly sophisticated scientific techniques. Since there are a number of other countries in the Middle East – and elsewhere – in which these considerations also apply, this finding has important implications for international businesses which operate in these countries, whatever their home country.     

小微企业正规融资效果研究——基于匹配模型的估计

正确评价小微企业正规融资的效果,不仅有利于缓解小微企业“融资难”问题,对制定小微企业信贷相关支持政策也具有重要意义。本文基于四川省小微企业信贷调查数据,从盈利和就业两个角度,以匹配方法估计了正规融资对小微企业的影响。结论表明:第一,小微企业有效信贷需求已较好满足,简单认为“融资难”并不准确;第二,正规融资使小微企业各项利润指标得到不同程度改善,这在一定程度上说明小微企业正规融资是可持续的。另一方面,短期内正规融资并未促进小微企业就业增加。第三,分行业看,正规融资对小微企业就业增加的抑制作用主要体现在制造业,而服务业和其他行业无明显影响。     

Budgeting practices and performance in small healthcare businesses

We present evidence linking primary healthcare business characteristics, budgeting practices, and business performance. Based on a sample of 144 responses from a survey of members of the Australian Association of Practice Managers (AAPM), we find that factors identified by contingency-based research are useful for predicting a business's budgeting practices. Specifically, we find the adoption of written budgets to be related to size and structure, and for businesses using written budgets, the extent of use is related to business structure, strategy and perceived environmental uncertainty. Finally, we find evidence of a relationship between budgeting practice and performance. Here, we initially find a business's performance to be positively associated with the use of written budgets. More refined tests of the “fit” between business contingency factors and extent of operating budget use then provide evidence of a positive association between the extent of “fit” and performance.     

Are there reliable determinant factors of capital structure decisions? Empirical study of SMEs in different regions of Portugal

On the basis of the empirical literature review about the capital structure decisions in Portuguese SMEs, this study analyses the relationships between the determinants – profitability, size, age, asset structure and growth, identified as reliable determinants in the empirical literature, and debt for SMEs located in different regions of Portugal (NUTS II). The global sample is made up of 11.016 SMEs and covers the period between 2007 and 2011. Overall, the results suggest that those determinants are reliable in explaining Portuguese SME capital structure decisions, suggesting that these decisions are closer to the predictions of Pecking Order Theory in comparison to the assumptions of Trade-off Theory. However, both financial theories are not enough to explain SME capital structure decisions.Furthermore, our results suggest that SMEs’ capital structure differs across regions and that, concerning the impact of profitability, size, age, asset structure and growth on firm debt, there are some differences across regions, which could be explained by regional heterogeneity. However, we do not find statistically significant differences in the kind (signs) of the relationships between those determinants and debt in Portuguese SMEs across the various regions.     

Cost Management in Sri Lanka: A Case Study on Volume,Activity and Time as Cost Drivers

Despite its theoretical superiority, the activity-based costing (ABC) model has had only moderate success in replacing the traditional volume-based absorption costing models in complex organizations worldwide. Even in organizations that have launched ABC projects, the implementations often do not sustain. In response to this general lack of enthusiasm worldwide for ABC, accountants developed the time-driven activity-based costing (TDABC) model as an alternative cost allocation model. This paper presents a comparison of the TDABC model with ABC, and considers if this alternative cost allocation model (1) is easier to implement from an international perspective and (2) provides comparable cost information for decision making. We use a case study in a country outside the model's country of origin to understand the similarities and differences in absorption costing systems that use ‘volume,’ ‘activities,’ and ‘time’ as the drivers of indirect cost allocations. We also use the case study to ascertain if any country‐specific factors impede ABC implementation. We conclude the following: the TDABC model has similar implementation complexities to ABC if modelling conditions are strictly adhered to; these complexities are independent of country‐specific factors; and in its simplest form, the model generates the same decision information errors of traditional costing.     

The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model

This paper investigates the extent to which the size affects the SME probabilities of bankruptcy. Using a dataset of (11,117) US non-financial firms, of which (465) filed for insolvency under chapters 7/11 between 1980 and 2013. We forecast the bankruptcy probabilities by developing four discrete-time duration-dependent hazard models for SMEs, Micro, Small, and Medium firms. A comparison of the default prediction models for medium firms and SMEs suggests that an almost identical set of explanatory variables affect the default probabilities leading us to believe that treating each of these groups separately has no material impact on the decision making process. However, comparisons between the micro and small firms with the SMEs firms strongly suggest that these categories need to be considered separately when modelling their credit risk.     

The role of venture capital in SME loans in China

We examine the role of venture capital (VC) in small and medium-sized enterprise (SME) loans through samples on the National Equities Exchange and Quotations (NEEQ) in China. We find that VC backup can effectively improve SMEs’ access to bank loans, especially short-term loans, at lower costs, and loans without collateral. VC backed loans are also less likely to default and positively related to SMEs’ performance. Our findings further suggest that VC backup reduces the information asymmetry between banks and SMEs through both “hard” information of better-quality financial statement and “soft” information of SMEs’ creditability. Evidenced by enhanced SME financing conditions and bank efficiency in loan allocation, the combined debt-equity financing scheme can be a meaningful new ingredient in the financial infrastructure of the largest emerging market.     

Effects of the New Basel Capital Accord on Bank Capital Requirements for SMEs

Using data from three countries (US, Italy and Australia) and surveying related studies from several other countries in Europe, we investigate the effects of the New Basel Capital Accord on bank capital requirements for small and medium sized enterprises (SMEs). We find that, for all the countries, banks will have significant benefits, in terms of lower capital requirements, when considering small and medium sized firms as retail customers. But they will be obliged to use the Advanced IRB approach and to manage them on a pooled basis. For SMEs as corporate, however, capital requirements will be slightly greater than under the existing Basel I Capital Accord. We believe that most eligible banks will use a blended approach (considering some SMEs as retail and some as corporate). Through a breakeven analysis, we find that for all of our countries, banking organizations will be obliged to classify as retail at least 20% of their SME portfolio in order to maintain the current capital requirement (8%). JEL classification: G21, G28     

内蒙古中小企业财务管理中存在的问题与对策

在世界各国的经济领域中,中小企业是一股重要而活跃的力量,其经营机制比较灵活,应变能力强,资金占有量少、投资省、见效快、经营类型复杂,产品品种繁多,企业数量庞大等特点.它们在相当长的时间里支持了经济的增长,然而2010年以来,大量的中小企业倒闭从中暴露出中小企业内部的诸多问题,而财务管理问题是所有问题的关键,据统计三分之一的中小企业失败的原因是财务管理控制不利,本文就内蒙古地区中小企业目前财务管理的地位和现状进行简单的阐述.针对目前中小企业存在的融资困难、财务控制薄弱、管理模式落后、合理筹资等问题,提出了科学的投资决策,建立健全的金融系统和内部控制制度等对策.     

SME internationalisation: Do the types of innovation matter?

Existing evidence suggest that innovative Small and Medium-sized Enterprises (or SMEs) are more likely to internationalise (i.e. have a greater propensity to export) than non-innovative SMEs. However, it is not yet clear whether and to what extent different types of innovation (i.e. product, service, and process) affect SME internationalisation. To address this issue, this study uses a research model that integrates the resource and institutional perspectives and empirically test it using data from the United Kingdom (UK) Longitudinal Small Business Survey. Our results confirm that SME internationalisation is more likely to occur in firms undertaking product innovation than process and/or service innovation, and a specific configuration of resource and institutional drivers influence SME internationalisation depending on the innovation type. These results lead to major policy and managerial implications in relation to promoting SME internationalisation through different types of innovation, given the UK withdrawal from the European Union.     

Green Strategy Costing: Early Days

Environmental impact and management is becoming a major priority for corporate strategists. while considerable information on corporate environmental disclosure practices in annual reports is now available, little is known about the internal environmental decision and control information systems in use, and corporate attitudes particularly to environmental costing. This paper reviews international green strategy developments and their implications for management accounting practice and examines environmental information and costing approaches and attitudes in a small number of Australian companies.     

Budgets and budgetary control in British businesses to c.1945

Many generalizations have been made regarding the introduction within British businesses of the costing/accounting techniques associated with the scientific management movement during the early decades of the twentieth century, but little detail is known of the process and extent of their adoption. This paper presents the findings from a survey of primary and (mainly) secondary sources regarding the use of budgets and budgetary control in Britain and raises questions as to the validity of the hypothesis that British firms failed to adopt them as rapidly as they should have done. The paper calls for detailed research into business archives in order that we can more fully understand not only the extent of their use, but also the nature of the dissemination process by which budgetary control came to be implemented in British businesses.     

独立董事特质与中小企业成长性——基于中小企业板上市公司的实证研究

本文选取2006年至2009年中小企业板102家上市公司为样本,研究我国中小企业板上市公司的独立董事特质--学历、年龄、薪酬、任期、比例、兼职数目和职业背景的多样性等与中小企业成长性的关系。研究发现:独立董事的比例、薪酬、职业背景的多样性等与企业成长性呈现显著的正相关关系;学历与企业成长性呈现不显著的负相关关系;年龄和兼职数目与企业成长性呈现较为显著的U型关系。     

A survey of factors influencing the choice of product costing systems in UK organizations

This paper reports on the findings of a postal questionnaire that examines the extent to which potential contextual factors influence the characteristics of product costing systems. Prior research has mostly used the adoption or non-adoption of ABC systems to capture the characteristics of product costing systems. This research has generally been inconclusive and has been unable to establish strong links between ABC adoption and those contextual factors that have been identified in the literature that are conducive to the adoption of ABC systems. Instead of using only the adoption or non-adoption of ABC systems as a measure of product cost system design this research uses four different proxy measures of cost system sophistication to capture the characteristics of the product costing systems. This allows for a more robust test of the relations among the predictor variables and cost system sophistication. Results indicate that higher levels of cost system sophistication are positively associated with the importance of cost information, extent of use of other innovative management accounting techniques, intensity of the competitive environment, size, extent of the use of JIT/lean production techniques and the type of business sector. No association was found between the level of cost system sophistication and cost structure, product diversity and quality of information technology.