Prelims

Half Title Page

ADVANCES IN MANAGEMENT ACCOUNTING

Series Page

ADVANCES IN MANAGEMENT ACCOUNTING

Series Editor: Chris Akroyd

• Volumes 1–25: Marc J. Epstein and John Y. Lee

• Volumes 26 and 27: Marc J. Epstein and Mary A. Malina

• Volumes 28–30: Mary A. Malina

• Volume 31: Laurie L. Burney and Mary A. Malina

• Volume 32: Laurie L. Burney

• Volume 33: Chris Akroyd and Laurie L. Burney

Title Page

ADVANCES IN MANAGEMENT ACCOUNTING - VOLUME 34

ADVANCES IN MANAGEMENT ACCOUNTING

EDITED BY

CHRIS AKROYD

University of Canterbury, New Zealand

United Kingdom – North America – Japan India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2023

Editorial matter and selection © 2023 Chris Akroyd.

Published under exclusive licence by Emerald Publishing Limited.

Individual chapters © 2023 Emerald Publishing Limited.

Reprints and permissions service

Contact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-80382-032-3 (Print)

ISBN: 978-1-80382-031-6 (Online)

ISBN: 978-1-80382-033-0 (Epub)

ISSN: 1474-7871 (Series)

Contents

List of Contributors

Editorial Page

EDITORIAL BOARD

ASSOCIATE EDITORS

• Kevin E. Dow

  The University of Texas at El Paso, USA

• Andrea R. Drake

  Louisiana Tech University, USA

• Jeffery A. Wong

  University of Nevada, Reno, USA

EDITORIAL BOARD

• Shannon W. Anderson

  University of California Davis, USA

• Romana Autrey

  Willamette University, USA

• Jan Bouwens

  University of Amsterdam, The Netherlands

• Laurie L. Burney (Past Editor)

  Baylor University, USA

• Clara X. Chen

  University of Illinois, USA

• Martine Cools

  Katholieke Universiteit Leuven, Belgium

• Antonio Dávila

  University of Navarra, Spain

• Joanna Golden

  The University of Memphis, USA

• Frank G. H. Hartmann

  Radboud University, The Netherlands

• James W. Hesford

  University of Missouri – St. Louis, USA

• Robert Hutchinson

  Michigan Tech University, USA

• Takaharu Kawai

  Doshisha University, Japan

• Leslie Kren

  University of Wisconsin, Milwaukee, USA

• Raef Lawson

  Institute of Management Accountants, USA

• Anne M. Lillis

  University of Melbourne, Australia

• Mary A. Malina (Past Editor)

  University of Colorado at Denver, USA

• Raj Mashruwala

  University of Calgary, Canada

• Ella Mae Matsumura

  University of Wisconsin – Madison, USA

• Lasse Mertins

  Johns Hopkins University, USA

• Lorenzo Patelli

  University of Denver, USA

• Sean A. Peffer

  University of Kentucky, USA

• Mina Pizzini

  Texas State University, USA

• Arthur Posch

  Universitat Bern, Switzerland

• Frederick W. Rankin

  Colorado State University, USA

• Karen L. Sedatole

  Emory University, USA

• Nicole Sutton

  University of Technology Sydney, Australia

• Basil Tucker

  University of South Australia, Australia

• Lourdes F. White

  University of Baltimore, USA

• Sally K. Widener

  Clemson University, USA

• Chaminda Wijethilake

  University of Essex, UK

• Marc Wouters

  Karlsruhe Institute of Technology, Germany

• Dimitri Yatsenko

  University of Wisconsin – Whitewater, USA

Statement of Purpose

Advances in Management Accounting (AIMA) is a publication of quality, theoretical, and applied research in management accounting. The journal’s purpose is to publish thought-provoking articles that advance knowledge in the management accounting discipline and are of interest to both academics and practitioners. The journal seeks thoughtful, well-developed articles on a variety of current topics in management accounting, broadly defined. All research methods including survey research, field tests, case studies, experiments, meta-analyses, and modeling are welcome. Some speculative articles, research notes, critiques, and survey pieces will be included where appropriate.

Articles may range from purely empirical to purely theoretical, from practice-based applications to speculation on the development of new techniques and frameworks. Empirical articles must present sound research designs and well-explained execution. Theoretical articles must present reasonable assumptions and logical development of ideas. All articles should include well-defined problems, concise presentations, and succinct conclusions that follow logically from the data.

Manuscript Form Guidelines

• Manuscripts should include a cover page that indicates the author’s name and affiliation.

• Manuscripts should include a separate lead page with an abstract (not to exceed 250 words) and seven keywords.

• The author’s name and affiliation should not appear on the abstract.

• Tables, figures, and exhibits should appear on a separate page. Each should be numbered and have a title.

• To be assured of anonymous reviews, authors should not identify themselves directly or indirectly.

• Manuscripts currently under review by other publications should not be submitted.

• Authors should email the manuscript in two WORD files to the editor. The first attachment should include the cover page and the second should exclude the cover page.

• Inquiries concerning Advances in Management Accounting should be directed to: Chris Akroyd at Advances.In.MA@Gmail.com

Introduction

This volume of Advances in Management Accounting (AIMA) presents a diversity of management accounting topics, methods and author affiliations, which form the basic tenets of AIMA. Included are papers on performance measurement, management control, incentive compensation and budgeting, which are focused on areas of particular interest to management accountants in practice such as the effects that narcissism, psychological pressure, honesty, fairness, service quality and corporate social responsibility have on performance and the roles of management accountants. The articles in this volume employ a variety of methods from experiments to surveys and a diversity in authorship with affiliations from Australia, China, Germany, New Zealand, Singapore, South Africa, the United Kingdom and the United States.

This volume begins with an article by Dworkis and Young which examines bonus-based incentive plans and managerial decision-making. The authors draw on research from neuroscience and use an experiment to examine decision choices under high and low incentive thresholds to see how adaptive and maladaptive narcissism affects managers’ decisions. Their results show that the bonus threshold in an incentive plan, the degree of narcissism and the relative level of adaptive and maladaptive components of narcissism have a significant interactive effect on decision quality. These results indicate that how personality characteristics affect various bonus thresholds influence decision-making performance and highlights how bonus thresholds and narcissism can have a significant interactive effect on decision-making quality.

Reichert and Sohn seek to understand how competition for monetary rewards influences cooperation. They use an experimental setting to simulate a context which is common in many job situations in practice, where an employee performs various tasks with one task being measured and rewarded with other tasks being difficult to measure and reward objectively. The authors draw on research from sports economics and psychology to propose that competition leads to a negative emotional response experienced as “psychological pressure” by the individuals competing. Their findings show that the effect of competition on cooperation results from psychological pressure which is an emotional response to competition. Thus, they suggest that incentive system design choices should take into consideration things like corporate well-being programs, which could play a critical role in reducing the psychological pressure employees experience, thus increasing both competition and cooperation which leads to higher levels of performance.

Teklay, Dow, Askarany, Wong and Shen investigate the relationship between transportation quality, customer satisfaction and profitability. Their study uses longitudinal data from the US airline industry to understand the simultaneous and asynchronous effect of quality of transportation services on customer satisfaction and financial performance. They also seek to better understand the relationship between customer satisfaction and financial performance which has been an area with mixed research findings. They found that low service quality in transportation has adverse effects on customer satisfaction and financial performance, but the impact of customer satisfaction on financial performance mixed with customer satisfaction was found to have a significant effect on financial performance for full-service airlines, but not for low-cost airlines.

Baird, Tung and Moses sought to understand the relationship between interactive and diagnostic uses of management controls and the disparity in employees’ perception of their organization’s emphasis on corporate social responsibility disclosures relative to their actions which is known as the “disclosure-action portrayal gap.” They also measure the subsequent impact on employees’ perceptions of operational performance and corporate social performance. The authors use data from a survey of lower-level US managers which they analyze using structural equation modeling. They show the use of management controls both interactively and diagnostically reduces the disclosure-action portrayal gap. In addition, they found that a lower disclosure-action portrayal gap is associated with higher operational and corporate social performance. These findings provide some practical insights on the use of management controls to help mitigate the disclosure-action portrayal gap which can positively influence organizational performance.

Enslin, Hall and du Toit then examine the emerging roles of management accountants as hybrid accountants and business partners to help business make decision. This is a topical area as it has been argued that the role of management accountants has been undergoing a change in emphasis from information provider to business partner. They carried out a survey of members of the IMA (USA) and CIMA (UK) which asked about their involvement with business decision-making. Using role theory as their frame, the authors found that management accountants employed in smaller firms, and middle-aged professionals were more likely to be involved in making business decision, but a large proportion of management accountants still play traditional information provider roles. This has implications for both professional bodies and educators as they need to train management accounts to carry out both information provider and decision-maker roles.

This volume concludes with three papers examining budgeting practices which play a major role in many organizations. The first of these articles by Su and Baird uses a survey of Australian middle and lower-level managers to examine the mediating role of employee reactions to the extent to which top management places emphasis on subordinates’ attainment of budget targets. Given the mixed findings in this area of research their paper provides new insights with their findings indicating that the reaction of employees to budgets fully mediates the association between budget difficulty with both budget value and job stress. They also show that employees reaction to budgets did not mediate the association between the emphasis on budgets with budget value and job stress. Rather, the emphasis on budgets was significantly negatively associated with job stress, implying that a greater emphasis on budgets is desirable in alleviating job stress. These insights contribute to our understanding of how employees react to budgets, with their perception of the fairness of their performance appraisal being influenced by budget difficulty, which in turn influences budget value and job stress.

Li and Drake then use a budgeting experiment to provide evidence on the effect that peer influence has on managerial honesty using ideas from self-concept maintenance theory and vicarious loss avoidance theory. They show that the level of earnings affects managers’ preferences for honesty which enables firms to effectively allocate resources to monitor activities. The practical finding is that firms that are financially strong should increase investment on monitoring as managers are likely to be less honest. Though employees’ preferences for honesty can be influenced by many factors such as job tenure, loyalty, and cultural norms, the results of their study suggest that during good economic times employees are less likely to be honest and that employee ethical behaviors are more likely to be influenced by peers.

In a similar vein Cheng, Lim and Yuen use an experimental research design to investigate the effect that honesty reminders have on budgetary slack. Based on self-concept maintenance theory, they argue that honesty reminders can reduce budgetary slack by making people more aware of their own standards of honesty, resulting in more honest behavior. They find evidence that both honesty reminders and penalties reduce budgetary slack, but that penalties can cause adverse side effects such as distrust and resentment between managers and subordinates. Therefore, the authors conclude that organizations should use honesty reminders as they are a less costly method than penalties for reducing budgetary slack.

The eight articles in Volume 34 represent relevant, theoretically sound and practical studies that extend our knowledge within the management accounting discipline. These articles manifest the journal’s commitment to providing a high level of contribution to management accounting research and practice.

Chris Akroyd

Editor