Using accounting information for consumption planning and equity valuation

This article develops a consumption-based valuation model that treats earnings and cash flow as complementary information sources. The model integrates three ideas that do not appear in traditional valuation models: (i) earnings provide information about future shocks to cash flow; (ii) earnings contain indiscernible transient accruals; and (iii) investors use cash flow and earnings to make allocation and consumption decisions and set price. Accordingly, the quality of earnings affects production and consumption as well as price. Among other implications, the model reveals that a valuation coefficient is not just a capitalization factor; it is the product of a capitalization factor and a structural factor reflecting earnings quality and accounting bias.     

An accounting change and information processing changes

Additional experimental evidence is presented about information processing changes made by individuals in response to an accounting change. Subjects apparently changed their information processing in response to a nonlinearity effect, but not in response to an accounting change and additional information about the change.     

An organizational contingencies view of accounting and information systems implementation

Most research on accounting and information systems (A&IS) development and implementation has focused on the individual and small group level phenomena which impact implementation success. While some researchers have considered organizational level variables, no consistent relationships between these variables and A&IS implementation success have yet emerged. To a great extent, this is due to an atheoretical research approach coupled with an undifferentiated view of A&IS.This paper develops a typology of A&IS types based on the nature of the task supported by the system. Theory and the results of research in the organization design area are drawn upon to develop propositions about the differential impacts of eight organizational characteristics on the implementation of different A&IS types. These propositions form an organizational level framework for analyzing A&IS implementation. The propositions can serve as testable hypotheses for future research efforts.     

Effects of organizational process change on responsibility accounting and managers’ revelations of private knowledge

We report the results of a nine-year field study that examines how responsibility accounting (RA) is used to manage horizontal relationships among several responsibility center (RC) managers including those who work on committees or cross-functional teams. We find theory-consistent evidence that the goal-congruent design or redesign of accounting and participation practices in general, and of RA in particular, depends on the magnitude, scope, and speed of organizational process change. When there is a change in the magnitude, scope, and speed of organizational process change, we find that the measurability of RC managers’ financial performance can change, and we also find that using RA to manage RC boundaries is an important mechanism for achieving goal-congruent behavior and avoiding dysfunctional behavior. Moreover, we show that several accounting and participation practices (e.g., activity-based costing, open book accounting, project budgeting, cross-functional teams) support RC boundary management that involves framing or reframing RC boundaries so as to influence competitive or cooperative behavior among RC managers. Finally, this study contributes by introducing a new research method to the accounting literature that is effective in structuring and interpreting longitudinal field data in relation to theoretical expectations.     

Managerial accounting systems and organizational control: A role perspective

This paper proposes a new way of viewing the relationship between managerial accounting systems and organizational control. This is done to provide a structure around which control processes may be observed and research conducted. In the context of role theory several propositions are advanced in order to explain the relationship. Namely, it is noted that managerial accounting systems are useful in communicating role expectations, are important to motivation, and are useful in communicating organizational climate. Also, several factors concerning managerial style and social context were seen to influence the operativeness of these propositions.     

Management accounting systems and organizational configuration: a life-cycle perspective

This study adopts a configurational approach that captures possible variables (strategy, structure, leadership and decision-making styles) and their relationships with management accounting systems (MAS) from an organizational life-cycle perspective. Using Miller and Friesen's life-cycle model Miller & Friesen, 1983, Miller & Friesen, 1984, a set of hypotheses were tested with data from mail survey and field studies of firms in the clothing and footwear industry. Results indicated that MAS formality changed to complement organizational characteristics across life-cycle stages. In uncovering how and why MAS formality changed during organizational development, our results indicate that it is growth firms that pay particular attention to increasing the formality of their MAS. Furthermore, between stages, it is the selection of management accounting tools that dominates the presentation of information in explaining the different MAS life-cycle stage designs. While based on cross-sectional data, the homogeneity of organizational configurations at each life-cycle stage does suggest that these results imply a longitudinal development of MAS.     

Management accounting systems change and departmental performance: the influence of managerial information and task uncertainty

Despite the proliferation of new management accounting techniques amidst pressures of organizational and global change, the issue of changes in firm-wide management accounting and control systems (MACSs) has largely been ignored in the research literature. This study explores the indirect effect of MACSs change on departmental performance for a cross-sectional sample of 232 medium-sized Singaporean firms. It is hypothesized that MACSs change affects performance but not directly. Instead, this relationship is mediated by managerial-relevant information (MRI) that is impacted by MACSs change, which, in turn, enhances performance. Task uncertainty is expected to moderate the intervening linkages; specifically, the latter are anticipated to strengthen under conditions of more task variability and task difficulty and, thus, augment the indirect effect of MACSs change on performance. The results offer support for the positive indirect effect of improving departmental performance from more MRI, triggered by MACSs change. Although not large, the indirect effect is strengthened when task variability and task difficulty are high. Overall, the findings are consistent with the stated purposes of management accounting that are embedded in normative definitions, and which are relied upon to motivate the framework for analysis.     

Factors influencing the role of management accounting in the development of performance measures within organizational change programs

Many companies are undergoing organizational changes encompassing innovative approaches to organizing production processes, restructuring work practices and developing new planning and control mechanisms. This paper explores the role that management accounting played in the development of performance measurement systems within five organizations implementing change programs. The major case study is of a large manufacturing firm undertaking changes which included the development of team structures, the adoption of a customer-focused strategy and the implementation of new performance measurement systems. In this company, a lack of integration of operational performance measures with strategic priorities contributed to poor integration of team activities with overall strategy. The paper proposes five interrelated factors that may help explain the extent to which management accountants contribute to the development of integrated performance measures and change programs. Case evidence drawn from a further four firms is presented to provide some validation of conclusions drawn from the primary case study.     

Manufacturing shareholder value: The role of accounting in organizational transformation

This paper explores the role of accounting calculations in constructing shareholder value within the context of organizational transformation in work organization. Using an intensive longitudinal case study (Conglom, a pseudonym), the paper relates innovation and experimentation in new forms of work organization to a drive for shareholder value creation. The priority given to shareholder value creation was articulated through a proliferation of accounting metrics and calculations that intermediated between the strategic preoccupation with securing financial profitability, as demonstrated by the share price, and the operational challenge of squeezing costs and improving margins to boost short-term performance through outsourcing, programme management and divestment. We interpret the discourse of shareholder value creation and the development of related accounting metrics as a hegemonic move which is central to the reassertion of capital – a development that, we contend, is symptomatic of a shift towards a more ‘despotic’ mode of capitalist reproduction [Burawoy, M., (1985). The politics of production. London: Verso], where the whip of the market, allied to notions of possessive individualism, free choice and self-determination, progressively replaces the velvet glove of the corporatist state.     

The sociology of enterprise, accounting and budget rules: Implications for organizational theory

The sociology of organizations has ignored the evolution of and variation in enterprise rules, budget systems and accounting rules. This paper takes a broad approach to accounting rules, arguing that they are related to large variations in enterprise forms and in industry problems. The rule making and enforcement apparatus of modern society is described. Both external and internal aspects of accounting rules and budget systems are explored.     

The case for strategic management accounting: The role of accounting information for strategy in competitive markets

A review of two economic theories is utilized to provide theoretical support for the greater possible involvement by accountants in what has been called strategic management accounting. One of these theories is concerned with the underlying characteristics of enterprise products. It suggests that there is a need for accountants to consider the cost structure of not only their own firm but of all enterprises in the relevant market and of potential entrants. It also suggests that costs can not be considered in isolation from demand factors. The second theory to be reviewed is concerned with whether a firm's cost structure permits its market strategy to be sustainable in the face of potential entry. This theory again emphasizes the intertwining of demand and cost factors and the need to consider these factors simultaneously. The use of this theory allows a new perspective to be taken to cost behaviour which is especially suited to high technology manufacturing.     

The need for change in accounting education: An educator survey

The Accounting Education Change Commission is leading an effort to change accounting education. Whether or not accounting faculty will support such change largely depends on whether or not they agree with the nature and extent of the needed change. This paper reports the results of a survey of 984 accounting faculty undertaken to determine views of accounting faculty concerning the issues involved in the accounting education change effort. Results indicate that although overall there is wide agreement that change is needed, there is significant disagreement over both the extent and form of that change. Evidence suggests that differences in the demographics of the teaching environment and differences in faculty background are associated with differences in perceptions of the extent and form of needed change.     

Quantum information and accounting information: Exploring conceptual applications of topology

Our previous attempt resulted in a paper by the same five authors, “Quantum information and accounting information: their salient features and conceptual applications,” published in the July–August 2006 issue of the Journal of Accounting and Public Policy. We now extend the previous paper to examine topological quantum computation, a remarkably innovative approach to decoherence and imprecise quantum computation. In this approach, exotic topological states are created for a natural medium to store and manipulate quantum information globally throughout the entire system. The process is intrinsically protected against imprecision and decoherence. We also explore conceptual, if not technical, applications of topological quantum computation to accounting. This is done by introducing topology’s inherent emphasis of qualitative characteristics to traditional accounting which has been dominated by quantitative characteristics. Here, financial statements’ monetary amounts may be contrasted to internal controls’ error frequencies. Part I of the paper deals with applications of topology to quantum information, after a brief introduction to basic tools. In particular the use of Fibonacci anyon and its powerful results are explained. Part II deals with applications of topology to accounting information. Part III deals with applications of topology to other potential fields.     

Conceptualizing management accounting change: an institutional framework

Starting from the position that management accounting systems and practices constitute organizational rules and routines, this paper describes an institutional framework for the conceptualization of management accounting change. Drawing from (old) institutional economics, the framework explores the complex and ongoing relationship between actions and institutions, and demonstrates the importance of organizational routines and institutions in shaping the processes of management accounting change. The inherent stability and continuity of organizational life is discussed, and three categorizations of institutional change are explored. The framework is offered as a starting point for researchers interested in studying management accounting change, and through such studies the framework will be extended and refined.     

Occupational reality shock and organizational commitment: Evidence from the accounting profession

A longitudinal field survey was undertaken to investigate the effects of occupational reality shock on the organizational commitment attitudes, intentions, and behavior of professional accountants. Comparative data was collected over a one year period from a sample of accountants employed in the controller's division of a large (Fortune 100) industrial firm and from a sample of accountants employed by a “Big Eight” public accounting firm. The results portray reality shock as having a significant, asymmetrical impact on the work-related attitudes, intentions, and to a lesser extent behavior of accountants employed in both organizational settings.     

Social and environmental accounting,organisational change and management accounting: A processual view

Consistent with calls for in-depth studies of social and environmental accounting and reporting (SEAR) intervention (Bebbington, 2007, Fraser, 2012, Contrafatto, 2012), our paper focuses on the interrelationship between organisational change and SEAR practices, as well as the involvement of management accounting in such organisational dynamics. Drawing insight from both Laughlin (1991) and Burns and Scapens’ (2000) theoretical frameworks, we explore the processes of change through which SEAR practices become elevated to strategising status, in the context of broader organisational and extra-organisational developments, but we also illuminate how institutionalised assumptions of profit-seeking limit the extent to which broader sustainability concerns become infused into day-to-day business practice. Our paper highlights the importance of management accounting in facilitating and shaping the cumulative path of SEAR practices (and sustainability more generally); however, we also heed caution against uncritical reliance upon conventional management accounting tools. The following paper extends our understanding of SEAR practices as cumulative process over time, an awareness of the potential limits to such developments in profit-seeking organisations, and stresses a need to be circumspect when involving management accounting.