Journal of Management
Accounting Research

1997, Volume 9


Research in Management Accounting by North Americans in the 1990s

Michael D. Shields
Michigan State University

Abstract: This article reviews the state of research in management accounting as evidenced by 152 articles published by North Americans during the first seven years of the 1990s in six leading journals: Accounting, Organizations and Society; The Accounting Review; Contemporary Accounting Research; Journal of Accounting and Economics; Journal of Accounting Research; and Journal of Management Accounting Research. The review is structured by the articles' topics, settings, theories, research methods and results. Based in part on this review, the next section discusses some dilemmas facing management accounting researchers and identifies six areas for research: changes in management accounting, horizontal accounting, strategic accounting, organizational accounting, virtual accounting and integrative research.

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Frontiers of Management Accounting Research

George Foster
Stanford University

S. Mark Young
University of Southern California

Introduction: This paper examines future directions for MAR. Emphasis is given to promoting efforts that will identify relatively unexplored areas that could make a substantive contribution to knowledge. Specifically, we are interested in research topics that would b of high priority to general mangers, management accountants and management accounting researchers. We believe that the interaction and interest of these stakeholders has increased substantially in recent years, and the potential for producing research of mutual interest is very high. To maximize their contribution, however, researchers must make careful initial choices that match areas of high general interest with those that exploit their core academic competencies.

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New Directions in Management Accounting Research

Anthony A. Atkinson
University of Waterloo

Ramji Balakrishnan
University of Iowa

Peter Booth
University of Technology

Jane M. Cote
Washington State University

Tom Groot
Vrije Universiteit Amsterdam

Teemu Malmi
Helsinki School of Economics

Hanno Roberts
Norwegian School of Management

Enrico Uliana
University of Cape Town

Anne Wu
National Chengchi University

Abstract: This paper builds on the 1995 Management Accounting Section research committee's report. We discuss three broad areas which researchers might follow to explore new issues in management accounting research, and emphasize the importance of a multi-paradigm, multi-method approach to research.

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Measuring the Success of Activity-Based Cost Management and Its Determinants

George Foster
Stanford University

Dan W. Swenson
University of Idaho

Abstract: This paper compares and contrasts alternative measures of activity-based cost management (ABCM) success in models testing ABCM success determinants. Both a priori and factor-analysis approaches are examined. The a priori measures examined are: (1) decision use (including by area of use, by business function, and by manager group, (2) decision actions taken, (3) dollar improvements, and (4) management evaluation as to overall success of ABCM. Factor analysis identified four factors in our database-decision use, product/customer applications, function/manager applications and manager group success perceptions. Both approaches yield similar findings. The explanatory power of ABCM success determinant models is highly affected by the choice of a success measure. Broad-based success measures (especially those incorporating details of how ABCM data is used in decisions) yield the highest explanatory power. The database examined has 166 ABCM sites from 132 separate companies.

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The Activity-Based Cost Hierarchy, Production Policies and Firm Profitability

Christopher D. Ittner
University of Pennsylvania

David F. Larcker
University of Pennsylvania

Taylor Randall
University of Pennsylvania

Abstract: We examine the descriptive validity and performance consequences of the activity-based cost hierarchy using time series data from a manufacturer of outdoor packs. Principal components analysis of a wide variety of manufacturing measures indicates that these measures generally correspond to the many measures related to unit, batch and product-sustaining operations are significantly correlated, reflecting the interdependencies among these operations in this production setting. We find some evidence that measures corresponding to the cost hierarchy classifications explain cost behavior. However, any cost increases from increased unit and product-sustaining activities tended to be offset by revenue increases from higher sales volumes and greater product variety, suggesting that management accounting researchers must consider both cost and revenue implications when assessing the performance consequences of activities corresponding to the cost hierarchy.

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Long-Term Change in Management Accounting: Perspectives from Historical Research

Joan L. Luft
Michigan State University

Abstract: Historical studies have played an increased role in economics and sociology in recent years and, thus, have come to influence management accounting research as well. This paper summarizes and critiques historical research in management accounting in the last decade and suggests its uses for expanding our understanding of present-day management accounting practice. Research on current practice has focused strongly on efficiency-based demand for management accounting information. Historical research also has elaborated efficiency-based explanations; but, in addition, it has expanded our view by providing examples of other sources of demand (shifts in bargaining power among contracting parties) and emphasizing the importance of changes in information supply and patterns of thought, as well as changes in demand. Moreover, historical research underlines the need for dynamic theories of management accounting change, which can explain the path of change as well as its final outcome.

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Fairness, Ethics and the Effect on Management Accounting on Transaction Costs

Joan L. Luft
Michigan State University

Abstract: The use of management accounting information in reducing transaction or contracting costs depends both on characteristics of the accounting information and on the preferences of the contracting parties. Much of the existing literature on accounting and contracting assumes a utility function representing preferences for wealth and leisure only. However, a wider range of accounting-related behavior can be explained by using a broader representation of preferences, including fairness and ethics considerations. Areas for further research are proposed. In particular, the value of more accurate product costing may not be completely specified unless alternative-preference-related contracting costs are taken into account.

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Satisfaction with Activity-Based Cost Management Implementation

Annie S. McGowan
Texas A&M University

Thomas P. Klammer
University of North Texas

Abstract: This study examines employees' satisfaction with activity-based cost management implementation across four sites. We extend a model developed by Shields and Young (1989) to examine the correlation between preparers' and users' satisfaction with ABCM implementation and behavioral, technical and situational variables describing the characteristics of the implementation and the ABCM system. Our results indicate that employees' perceptions concerning the success of ABCM implementation are, on average, favorable. Consistent with the results presented by Shields (1995), we found top management support, the adequacy of training and training resources, and the linkage of ABCM to performance evaluation systems useful in explaining participants perceptions of ABCM implementation. User involvement in the implementation and perceptions of the quality of information produced by the system also correlate positively with employees' satisfaction with ABCM implementation. Our results also indicate that perceptions related to ABCM may vary depending on the role of the individuals involved.

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Full-Cost Pricing and the Illusion of Satisfaction

Eric W. Noreen
University of Washington
Hong Kong University of Science and Technology
Price Waterhouse Professor, INSEAD

David Burgstahler
University of Washington

Abstract: This paper demonstrates that for a multi-product firm with fixed costs, full-cost markup rules impose a constraint on the relationship among product prices that may prevent the firm from achieving satisfactory profits even when satisfactory profits are feasible. For any given cost structure and allocation basis, there always exist well-behaved demand curves such that feasible satisfactory profits cannot be realized using a full-cost pricing strategy. Consequently, there is no guarantee that setting prices via a full-cost pricing strategy will yield a satisfactory profit - even when it is possible to earn satisfactory profits using a different pricing strategy. Factors that might mitigate concerns about full-cost pricing also are discussed.

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