Showing papers in "Accounting Organizations and Society in 2003"
TL;DR: Contingency-based research has a long tradition in the study of management control systems (MCS), and researchers have attempted to explain the effectiveness of MCS by examining designs that best suit the nature of the environment, technology, size, structure, strategy and national culture.
Abstract: Contingency-based research has a long tradition in the study of management control systems (MCS). Researchers have attempted to explain the effectiveness of MCS by examining designs that best suit the nature of the environment, technology, size, structure, strategy and national culture. In recent years, contingency-based research has maintained its popularity with studies including these variables but redefining them in contemporary terms. This paper provides a critical review of findings from contingency-based studies over the past 20 years, deriving a series of propositions relating MCS to organizational context. The paper examines issues related to the purpose of MCS, the elements of MCS, the meaning and measurement of contextual variables, and issues concerning theory development. A final section considers the possibility that contingency-based ideas could encompass insights from a variety of theories to help understand MCS within its organizational context.
2,909 citations
TL;DR: The authors examined the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers, and found that greater measurement emphasis and diversity than predicted by the benchmark model is associated with higher satisfaction and stock market performance.
Abstract: This study examines the relation between measurement system satisfaction, economic performance, and two general approaches to strategic performance measurement: greater measurement diversity and improved alignment with firm strategy and value drivers. We find consistent evidence that firms making more extensive use of a broad set of financial and (particularly) non-financial measures than firms with similar strategies or value drivers have higher measurement system satisfaction and stock market returns. However, we find little support for the alignment hypothesis that more or less extensive measurement than predicted by the firm's strategy or value drivers adversely affect performance. Instead, our results indicate that greater measurement emphasis and diversity than predicted by our benchmark model is associated with higher satisfaction and stock market performance. Our results also suggest that greater measurement diversity relative to firms with similar value drivers has a stronger relationship with stock market performance than greater measurement on an absolute scale. Finally, the balanced scorecard process, economic value measurement, and causal business modeling are associated with higher measurement system satisfaction, but exhibit almost no association with economic performance.
843 citations
TL;DR: In this paper, a series of formative contributions to contextualist and critical research in auditing are discussed, focusing on four substantive themes: the audit process and formal structure; auditing as a business; working papers and image management; new audits.
Abstract: This essay discusses an important series of formative contributions to contextualist and critical research in auditing. A small number of relatively recent papers question rationalized accounts of the audit process and explore the complex ‘back stage’ of practice. These papers are interpreted as contributions to our understanding of the production of legitimacy around four substantive themes: the audit process and formal structure; auditing as a business; working papers and image management; new audits. The papers also point to the socially constructed nature of professional inference and suggest a fruitful basis for taking these research efforts forward.
673 citations
TL;DR: A review of the use of cultural indices in accounting research can be found in this article, where the authors identify problems such as: (i) the assumption of equating nation with culture, (ii) the difficulties of, and limitations on, a quantification of culture represented by cultural dimensions and matrices; and (iii) the status of the observer outside the culture.
Abstract: The continuation of accounting research utilising Hofstede’s cultural indices suggests an absence of sufficient consideration for the reasons behind the rejection of such a universalist approach in anthropology and sociology. These reasons include the assumption of equating nation with culture and the difficulty, and limitations on an understanding of culture by means of numeric indices and matrices. Alternative approaches for research on national differences in accounting are suggested. # 2002 Elsevier Science Ltd. All rights reserved. In 1967, employees in an organization, IBM, were asked to complete an attitude survey. IBM had organized incidental surveys of parts of its organization since 1950, but it was decided to standardize an international survey in order to provide a management tool for organization development. This survey process repeated until 1973, resulting in 117,000 responses from88,000 employees in 66 countries. The results of this data led the head of the international teamconducting the survey, Geert Hofstede, to develop cultural indices. These indices provided four dimensions of national culture for each one of the countries surveyed. Twenty years later, accounting research is one of numerous disciplines which utilize Hofstede’s classification and quantification of cultural differences. This study acknowledges the variety of applications of Hofstede’s Culture’s Consequences— International Differences in Work-Related Values (1980) (hereafter referred to as Culture’s Consequences) in accounting research, and then examines the development of ideas about culture and its quantification by Hofstede, and the theoretical bases for Hofstede’s cultural measurements. This review identifies problems such as: (i) the assumption of equating nation with culture (ii) the difficulties of, and limitations on, a quantification of culture represented by cultural dimensions and matrices; and (iii) the status of the observer outside the culture. Possible alternative and multiple explanations of national differences in accounting systems are also described. A further problemis a general lack of confidence in the assumption of stability of cultural differences, considering the twenty years since the 1980 publication of Culture’s Consequences. Cultural diffusion and the dynamism of both national and ethnic shifts may be problematic where reification and indexation of culture is concerned. The outcome of this examination suggests that the manner in which Hofstede established the dimensions of culture, and the subsequent reification of ‘‘culture’’ as a variable in cross-national studies in accounting research, led to a misleading
664 citations
TL;DR: This article analyzed the means by which the authors of The Balanced Scorecard have created that attention and concluded that the text is not so convincing as persuasive, a feature characteristic of the genre of management guru texts.
Abstract: The Balanced Scorecard currently receives much attention. This article analyses the means by which the authors of The Balanced Scorecard have created that attention. Is it the result of a new and convincing theory,or is it merely the result of persuasive rhetoric,where convincing theory differs from solely persuasive rhetoric in that concepts and claims are based on sound argumentation? The article concludes that the text is not so convincing as persuasive—a feature characteristic of the genre of management guru texts; and,at the end,the article discusses the reasons for and appropriateness of such a genre and the consequences that should follow from the results of the analysis. # 2003 Elsevier Ltd. All rights reserved.
616 citations
TL;DR: In this paper, the authors report on a survey of manufacturing companies, and use structural equation modeling to examine the relationships between the changing competitive environment, and a range of organizational variables as antecedents to management accounting change.
Abstract: This paper reports on a survey of manufacturing companies, and uses structural equation modeling to examine the relationships between the changing competitive environment, and a range of organizational variables as antecedents to management accounting change. The results indicate that an increasingly competitive environment has resulted in an increased focus on differentiation strategies. This, in turn, has influenced changes in organizational design, advanced manufacturing technology and advanced management accounting practices. These three changes have led to a greater reliance on non-financial accounting information which has led to improved organizational performance.
586 citations
TL;DR: The authors provide a summary graphic representation (maps) of the theory-consistent evidence about the causes and effects of management accounting, as presented in 275 articles published in six leading journals.
Abstract: This paper provides a summary graphic representation (maps) of the theory-consistent evidence about the causes and effects of management accounting, as presented in 275 articles published in six leading journals. The maps highlight connections and disconnects in the diverse streams of management accounting literature, in terms of what has been researched, the direction and shape of the explanatory links proposed, and the levels of analysis. Some of these connections and disconnects seem likely to be artifacts of the historical development of management accounting research, while others are more consistent with the natural links around and within management accounting. Based on criteria from social-science research, we offer 17 guidelines to help future research capture natural connections, avoid artifactual connections, and develop a more complete and valid map of the causes and effects of management accounting.
565 citations
TL;DR: In this paper, a review of alternative management accounting research in AOS from 1976 until 1999 is presented, highlighting seven different research perspectives that have flourished under this label: a non-rational design school; naturalistic research; the radical alternative; institutional theory; structuration theory; a Foucauldian approach; and a Latourian approach.
Abstract: This paper reviews alternative management accounting research in AOS from 1976 until 1999. We highlight seven different research perspectives that have flourished under this label: a non-rational design school; naturalistic research; the radical alternative; institutional theory; structuration theory; a Foucauldian approach; and a Latourian approach. It is contended that these different approaches have assumed an important role in raising a number of significant and interesting disciplinary insights. As a form of collective non-positivist enterprise, alternative management accounting research has demonstrated: the many different rationalities of management accounting practice; the variety of ways in which management accounting practice is enacted and given meaning; the potency of management accounting technologies; the unpredictable, non-linear and socially-embedded nature of management accounting change; and the ways in which management accounting practice is both constrained and enabled by the bodily habitudes of its exponents. In conclusion, we consider how alternative management accounting research may sustain its distinct contributions in the future.
482 citations
TL;DR: In this paper, the authors discuss the importance of conducting experimental research in managerial accounting and provide a framework for understanding and assessing the contributions of research in this area, and then use this framework to organize, integrate, and evaluate the existing experimental managerial accounting research.
Abstract: In this paper, I discuss the importance of conducting experimental research in managerial accounting and provide a framework for understanding and assessing the contributions of research in this area. I then use this framework to organize, integrate, and evaluate the existing experimental managerial accounting research. Based on my review and synthesis of the literature, I suggest numerous avenues for future experimental research in managerial accounting.
446 citations
TL;DR: The authors argue that the rhetorical support for PFI rests on a conflation of risk and uncertainty and that PFI leads to contractual arrangements that are inappropriate for the provision of public services over the medium term.
Abstract: This paper analyses the UK's Private Finance Initiative (PFI) at a conceptual level by focusing on the management of risk, which is central to the justification for the policy and its application across the public services, and uncertainty, which underlies the role of the state. The paper argues that the rhetorical support for PFI rests on a conflation of risk and uncertainty and that PFI leads to contractual arrangements that are inappropriate for the provision of public services over the medium term.
349 citations
TL;DR: In this paper, the authors argue that research progress in accounting has been significantly hindered by the fact that most researchers focus their theories and perspectives on a single research discipline, i.e., economics.
Abstract: This paper argues that research progress in accounting has been significantly hindered by the fact that most researchers focus their theories and perspectives on a single research discipline. The point is illustrated by discussing research in the area of organizational incentive systems. The relevant base disciplines in this area are economics and several behavioral sciences (primarily psychology and sociology). The paper uses a citation and content analysis to show that the economics- and behavioral-based empirical papers published in accounting journals differ significantly and that there is little cross-fertilization between them. It then discusses the reasons contributing to the single discipline foci and describes how research would be improved if the disciplinary parochialism were reduced.
TL;DR: Baskerville does not realize that there exist different paradigms in the social sciences about the meaning of "culture" leading to different research approaches as discussed by the authors, and her arguments are therefore largely irrelevant to cross-cultural accounting research.
Abstract: Baskerville does not realize that there exist different paradigms in the social sciences about the meaning of “culture”, leading to different research approaches. Her arguments are therefore largely irrelevant to cross-cultural accounting research.
TL;DR: In this paper, the authors argue that the FASB employs rhetorical strategies in its accounting standards that construct (and attempt to persuade us) that a specific standard is "good", that silence alternatives and possible criticisms of the standard and that construct the FAsB as a "good" standard-setter.
Abstract: Members of the Financial Accounting Standards Board (FASB) and its staff are continuously engaged in a variety of efforts to persuade individuals that the work of this entity is valuable, appropriate, useful and correct. In this paper, I focus upon the persuasive efforts that are employed in “official” accounting standards. These documents do more than simply detail new technical accounting requirements. The texts have been shaped to express a particular point of view about the significance of events and activities that occurred during the standard-setting process and contain numerous efforts to persuade readers to accept this perspective. In particular, I argue that the FASB employs rhetorical strategies in its accounting standards that construct (and attempt to persuade us) that a specific standard is “good”, that silence alternatives and possible criticisms of the standard and that construct the FASB as a “good” standard-setter. These strategies help to construct standards as technical products and thereby also work to maintain the myth of accounting objectivity.
TL;DR: The authors examined the dramaturgy of exchange relations among the Big Five public accounting firms, the American Institute of Certified Public Accountants (AICPA), the Institute of Internal Auditors (IIA), and the Securities Exchange Commission (SEC), as it concerns the outsourcing of internal audit services to international external audit firms.
Abstract: The purpose of this paper is to use the sociology of professions, institutional theory, and outsourcing literatures to examine the dramaturgy of exchange relations among the Big Five public accounting firms, the American Institute of Certified Public Accountants (AICPA), the Institute of Internal Auditors (IIA), and the Securities Exchange Commission (SEC), as it concerns the outsourcing of internal audit services to international external audit firms. Toward this end, a latent content analysis of a variety of public and private documents is performed where we find that the transformation of the jurisdiction of internal auditing to be rife with conflict, characterized by a heated dramaturgy of exchange relations among the Big Five, the AICPA, the IIA, the SEC, and also the US Congress. Rhetorical ploys supporting this dramaturgy incorporated such key terms as: “world class services”, “global economy”, “market forces”, “commodification”, “monetization of professional services”, “knowledge experts”, “the knowledge millennium”, “leveraging knowledge”, “higher order platform of services”, “value chains”—all in addition to making more money. At issue is how the competing factions seek to re-institutionalize societal expectations of proper professional behavior to legitimate a transformation of jurisdictions, for example, to create the “knowledge expert” providing robust services in a global economy.
TL;DR: In contrast to the UK and US environments where persons of African and East Indian descent are described as ethnic'minorities' as mentioned in this paper, in Trinidad and Tobago (T&T) these two groups constitute 80% of the country's population.
Abstract: In contrast to the UK and US environments where persons of African and East Indian descent are described as ethnic ‘minorities’, in Trinidad and Tobago (T&T) these two groups constitute 80% of the country's population. However despite their numerical majority, Afro and Indo Trinidadians suffered the same fates of exclusion and under-representation in professional accountancy as persons of similar ancestral backgrounds in the US and the UK. This paper shows that despite the socially constructed nature of race and the contingent nature of terms such as ‘black’ and ‘white’ when applied to persons, the practice of professional accountancy has consistently excluded or if not, offered limited participation, to persons socially defined as ‘black’. The case of T&T not only illustrates the unique forms in which such exclusion may occur, but also illustrates the continued significance of race in the T&T profession and its likely salience for the contemporary global profession.
TL;DR: This article investigated the effect of language-culture and linguistic translation on the interpretation of verbal uncertainty expressions found in International Accounting Standards (ICA) and found significant differences in interpretation across the three groups.
Abstract: This study investigates the effect of language-culture and linguistic translation on the interpretation of verbal uncertainty expressions found in International Accounting Standards. Data are collected from US Certified Public Accountants and German-speaking Wirtschaftsprufer (chartered or certified accountants) to test three hypotheses. One group of German speakers evaluated uncertainty terms expressed in German and another group in English. The results indicate significant differences in interpretation across the three groups. Some differences are attributed to a language-culture effect and others to a translation effect, with the language-culture effect being more pervasive. These results raise the question of whether International Accounting Standards can be applied consistently across language-cultures.
TL;DR: In this paper, the authors consider how certain notional organisational culture elements became embedded in the design of an innovative management accounting system (MAS) and how the alignment between the cultural premise of the MAS and that espoused by MAS users influenced the perceived success of the new system.
Abstract: This study considers how certain notional organisational culture elements became embedded in the design of an innovative management accounting system (MAS) and how the alignment between the cultural premise of the MAS and that espoused by MAS users influenced the perceived success of the new system. The research data for the study were obtained over a three and half year period and derive from interviews, questionnaire responses and public as well as internal corporate documents. The site chosen for the study is a division of Siemens—a global firm in the electronics and electrical components industry. Two employee groups with functional expertise in engineering and business economics respectively comprise the MAS user groups. During the development and implementation phases of the new MAS, Siemens was actively engaged in a corporate-wide culture change programme that was supportive of the new MAS initiative. The study results are in two parts. First they report on the manner in which the organisational programme of culture change affected the cultural premise of the new system. Second, they indicate that the degree of alignment between the organisational culture elements which were embedded within the MAS and the organisational outlook of the two user groups significantly influenced the system's perceived success.
TL;DR: In this article, a review of the papers published in Accounting, Organizations and Society (AOS ) during the period 1976-2000 that report auditing judgment and decision experiments is presented.
Abstract: We review the papers published in Accounting, Organizations and Society ( AOS ) during the period 1976–2000 that report auditing judgment and decision experiments. We also review the AOS papers during the same period that attempt to influence the future directions of such studies. Our review is focussed on describing the characteristics and quantity of such papers and assessing their impact on the scholarly literature. We employ citation data and analysis as the primary means of judging scholarly impact and we draw comparisons with other leading research journals. Our inquiry and analysis reveals that AOS papers reporting auditing judgment and decision experiments have been a significant component of the audit judgment and decision literature, although the impact of the AOS papers is less than that of papers appearing in the other leading journals. For the AOS future-directions papers, however, we find a relatively large number and citations that compare favorably with citations of both papers reporting experiments and future-direction papers in other leading journals.
TL;DR: The authors argue that the prevalence of the macroeconomy and the widespread of economic management of modern society originate partly from the movement of accounting expressionism that is the social construction of official economic reality in an accounting framework.
Abstract: Despite the fact that the concept of the “macroeconomy” first emerged after the 1930s, only becoming prevalent after the 1950s, macroeconomic terms are ubiquitous today. Historians refer to the Keynesian Revolution as the origin of the macroeconomic revolution. This paper addresses the revolution from an accounting point of view, and argues that the prevalence of the notion of the macroeconomy and the widespread of economic management of modern society originate partly from the movement of accounting expressionism that is the social construction of official economic reality in an accounting framework. The development history of British national accounting is of central importance to the development of macroeconomics. This paper integrates the abstract theme of social constructivism with concrete evidence from recently available archives of Keynes, Stone, Meade and Bray.
TL;DR: In this paper, the authors explore the articulation of transaction cost economics and management control issues through the use of the work of early institutional economist John R. Commons, and incorporate institutional change as important to considerations of the viability of alternative forms of governance including various management control practices.
Abstract: Transaction cost economics (TCE) has been proposed as a useful approach for examining management control (MC) issues. The purpose of this paper is to explore the articulation of TCE and MC through the use of the work of early institutional economist John R. Commons. In keeping with Commons’ work, we incorporate institutional change as important to considerations of the viability of alternative forms of governance including various management control practices. Also consistent with Commons’ work, our paper elaborates upon the significance of the concepts of “asset specificity” and “opportunism” through an illustrative analysis of contemporary efforts to de-regulate the utilities industry in the State of California, and the related role of Enron Corporation in those de-regulatory efforts. This context provides a rich backdrop to highlight the joint articulation of TCE and MC issues.
TL;DR: In this article, the authors present the author's own ontological and epistemological theory in reference to accounting representation (particularly to such notions as income and capital), and compare it with Baudrillard's view and its application to accounting by the Macintosh team.
Abstract: Baudrillard's “order of simulacra” and his notion of “hyperreality” are attempts of a postmodern author to deal with (or possibly reject) the problems of representation and ontology. These attempts were applied to accounting by Macintosh et al. [Accounting, Organizations and Society 25 (2000) 13–50] with the conclusion that our present notions of income, capital, etc. no longer refer to real objects or events, and that “accounting no longer functions according to the logic of transparent representation, stewardship or information economics”. The current paper presents the author's own ontological and epistemological theory in reference to accounting representation (particularly to such notions as income and capital). These results are then juxtaposed to and compared with Baudrillard's view and its application to accounting by the Macintosh team. The conclusions are: (1) Baudrillard's approach is not suitable to accounting research or any scientific analysis; (2) the notions of income and capital still have referents in reality; (3) for accounting valuation a purpose-oriented representation is required; (4) the “clean surplus model” harbours some hope for future improvement of accounting. While Macintosh et al. (2000) and I disagree on the first two points, the last two items seem to be the major points of agreement between us.
TL;DR: Hartmann and Moers as discussed by the authors addressed the use of moderated regression analysis (MRA) in contemporary management accounting and control research, emphasizing the need to distinguish between confirmatory and exploratory uses of MRA.
Abstract: This paper addresses the use of moderated regression analysis (MRA) in contemporary management accounting and control research. It follows up on a discussion started by us [Hartmann & Moers, Accounting, Organizations and Society 24 (1999) 291–315] in this journal and provides a reaction to arguments put forward by Dunk (this issue). In doing so, this paper addresses the relationship between substantive theory and statistical test, emphasizes the need to distinguish between confirmatory and exploratory uses of MRA and argues that the importance of moderated hypotheses and tests may have been overstated in the management accounting literature under review.
TL;DR: In this paper, an accounting innovation introduced by early twentieth century department store management is examined, unraveling the workings of garment alteration overhead allocations and the linkages between such accounting innovation and the creation of the statistical standard body size.
Abstract: Early twenty first century Western society is commonly portrayed as a consumer society. Yet accounting research has to date neglected to explore the possible role of accounting technique in the intricate linkages between consumption, body size and individualism. This paper seeks to examine an accounting innovation introduced by early twentieth century department store management. The paper unravels the workings of garment alteration overhead allocations and the linkages between such accounting innovation and the creation of the statistical standard body size.
TL;DR: The authors explored the relationship between household accounting and patriarchy during the early twentieth century in the USA and Britain and argued that the suite of calculative techniques prescribed by ‘household engineers' merely attempted to occupy middle class women in the domestic sphere.
Abstract: Social constructionist theories of gender are utilised to explore the relationship between household accounting and patriarchy during the early twentieth century in the USA and Britain. This period witnessed a reformulation of the ideology of domesticity founded on precepts derived from modish scientific management. It is argued that the suite of calculative techniques prescribed by ‘household engineers’ merely attempted to occupy middle class women in the domestic sphere. Rather than offering a source of professionalisation and liberation, the practice of financial management, costing, record keeping and time and motion study, contributed to a reassertion of private patriarchy, confirmed the gendered nature of spatiality, reinforced the role of woman as a consumer and diverted attention from career building outside the home.
TL;DR: The effects of financial and macroeconomic accounting on modern economic society have not been examined in depth from an epistemological and critical viewpoint as discussed by the authors, however, in many cases, in the setting of micro managerial accounting.
Abstract: The new accounting research has been devoted to illuminating the social and constitutive aspects of accounting. This has been done, however, in many cases, in the setting of micro managerial accounting. The effects of financial and macroeconomic accounting on modern economic society have not been examined in depth from an epistemological and critical viewpoint. This article attempts to develop a hypothesis that financial accounting (particularly, that of macro economic entities) has been centrally implicated in the process through which economic ideas and economic management have become ubiquitous in modern society. Accounting's power and the reason for its steady growth are sought in its various formalities rather than its representational capacity. Several factors that are considered to constitute the formalities form a self-perpetuating apparatus that facilitates the prevalence of accounting in modern economic society.
TL;DR: In this article, an organizational study is used to analyze how management use partisan performance measurements to control the labor process and find that management's strategies are influenced by how technology, worker skill, and product competition affect worker capacity to resist.
Abstract: Accounting influences the evolution of management identity by determining which aspects of performance are made visible. However, management do not technocratically apply accounting measurements. An organizational study is used to analyze how management use partisan performance measurements to control the labor process. Management's strategies are influenced by how technology, worker skill, and product competition affect worker capacity to resist. Management's dilution of capital's interest by accommodating labor's needs, or mobilization of the efficiency ethos, reflect the politics of dialectical control.
TL;DR: This paper examined whether constraining experienced auditors' processing by having them process evidence in a pre-established sequence (an experimental control technique used in previous studies) prevents them from using their usual processing strategies and thereby affects their judgments.
Abstract: This study examines whether constraining experienced auditors’ processing by having them process evidence in a pre-established sequence (an experimental control technique used in previous studies) prevents them from using their usual processing strategies and thereby affects their judgments. We compare the relative attention to evidence and judgments of experienced and inexperienced auditors in a constrained versus an unconstrained processing condition. Consistent with expectations, experienced auditors’ going-concern judgments differed from inexperienced auditors’ judgments only when processing was unconstrained. This difference in judgments was the result of differential attention to evidence. These results demonstrate that the failure to consider how experienced auditors process evidence can result in inadvertently adopting control techniques that limit the generalizability of experimental findings. Although our study used a going-concern task, our conclusions are likely to apply to a variety of ill-structured audit tasks that require a goal-oriented, directed evaluation of evidence.
TL;DR: In this article, the authors reviewed the work conducted by Hartmann and Moers (1999) in the context of the wider literature in management accounting and put into context many of their concerns and addressed a number of issues arising from their paper.
Abstract: A thought-provoking article by Hartmann and Moers [Accounting, Organizations and Society, 24 (1999) 291] recently addressed two critical issues, the first being the research that has centered on reliance on accounting performance measures (RAPM) and second, the use of contingency theory in behavioral management accounting. They examined and critically evaluated statistical methods used to test contingency hypotheses, and in particular, they addressed the use of moderated regression analysis that they considered is the dominant form of statistical analysis in budgetary research. This paper reviews, first, much of the work conducted by Hartmann and Moers (1999) in the context of the wider literature in management accounting. Second, the paper puts into context many of their concerns and addresses a number of issues arising from their paper. Doing so may facilitate further progress in the behavioral literature and clarify a number of matters that would otherwise limit the field of endeavor.
TL;DR: In this article, the authors examined factors that affect when this practice improves decisions and when it impairs decisions, and they concluded that explicit capacity cost reporting can be detrimental to growing companies.
Abstract: A recent innovation in management accounting is the practice of reporting unused capacity costs. This experimental study examines factors that affect when this practice improves decisions and when it impairs decisions. Reporting unused capacity costs uniformly leads experimental participants to cut unused capacity resources. Such cuts improve overall profitability when demand exhibits a negative trend. However, the cost savings from capacity reduction are more than offset by the increased opportunity cost of foregone demand when demand exhibits a positive trend. As such, this study suggests that explicit capacity cost reporting can be detrimental to growing companies.
TL;DR: In this article, the authors explore the workings of an accounting technique in an established domicile of consumption: the department store and investigate the widespread adoption of the Retail Inventory Method by US department stores from 1920 to 1930.
Abstract: This paper seeks to explore the workings of an accounting technique in an established domicile of consumption: the department store. We investigate the widespread adoption of the Retail Inventory Method by US department stores from 1920 to 1930. Our analysis reveals a constellation of events situated against a backdrop of new programmatic discourses that gave rise to the adoption of the method. The technical properties of the method created visibilities in store operations which substantiated a recasting of internal power relations. The resulting shifts facilitated the emergence of organizational arrangements familiar to the early twenty-first century consumer.