Advances in Management Accounting: Volume 27

We examine the role of financial and nonfinancial performance measures in managing revenues derived from life cycles of a type of intellectual property products − motion pictures.

Our study focuses on the first two markets in which audiences can watch a motion picture – the upstream theatrical market and the downstream home video market. We combine data collected from numerous public and proprietary sources and form a final sample of 654 motion pictures. Then we perform regression analysis on the data.

First, three measures of a movie’s performance in the theatrical market, opening box office revenue, peak rank, and weeks at the peak rank, have positive effects on subsequent revenues in the home video market. Second, the same set of performance measures also predicts the motion picture’s life span in the theatrical market. Third, when the actual life span of a motion picture in the theatrical market deviates from its predicted value, the total return on investment in the motion picture decreases.

We do not have data on other downstream markets related to motion pictures, such as pay-per-view and online video streaming.

This study suggests that the public and proprietary data can be used to inform managerial decisions regarding intellectual property product life cycles.

This is the first accounting study that directly examines life cycle revenues of intellectual property products. We also extend literature on revenue driver and revenue management research to the product level.

Despite the benefits of delegation, anecdotal and survey-based evidence suggests that firms do not optimally delegate decision-making authority. However, to date, no quantifiable evidence supports this claim.

We design an experiment to explore the superior’s choice between delegation and information elicitation. We also examine the effect of the superiors’ choice on the amount of effort provided by subordinates to gather decision-facilitating information.

We find that, compared to economic predictions, superiors delegate less often than they should. Subordinates exert lower effort when superiors elicit information than when superiors delegate the decision to them. As a result, superiors earn lower profit when they elicit information than when they delegate decision-making authority.

Our empirical evidence supports two main tenets espoused in the literature on the allocation of decision rights. First, the evidence of under delegation contributes to the literature which maintains that superiors’ tendency to under-delegate leads firms to become overly centralized.

By designing a novel experimental, we identify systematic ways in which behavior deviates from economic theory and contribute to the discussion on how firms utilize information. In particular, under delegation prevents firms from exploiting economies that arise from local capabilities and task specialization, and results in forgone profits.

This paper argues that currently management accounting is simply too narrow and proposes how to broaden its scope to make it more relevant and useful.

The approach is to provide a critique of the extent to which management accounting sufficiently deals with three primary areas that classic management accounting has been myopic about at least to some extent: Organizational control, Organizational measurement, and Intellectual assets.

The paper argues that management accounting has not taken a “deep dive” into these areas and has placed itself at risk of being marginalized. It presents potential frameworks and tools of organizational control, organizational measurement, and intellectual assets as “add-ons” to management accounting to increase its relevance and utility.

The paper shows how management accounting must be broadened to include all organizational measurement and accountability for planning and control.

The paper describes several global applications of the proposed revised frameworks, methodologies, and tools presented as potential add-ons to management accounting. These applications demonstrate the feasibility, utility, and generalizability of the broader management accounting “tool box” presented.

The paper proposes a revised paradigm for management accounting. This paradigm is original and its value is in serving as a catalyst for academics as well as practitioners to rethink and broaden the current paradigm of management accounting in order to be more relevant and useful. It provides a potential new set of tools for management accounting.

This study explores how balanced scorecard format and reputation from environmental performances interact to influence performance evaluations.

Two general options exist for inserting environmental measures into a scorecard: embedded among the four traditional perspectives or grouped in a fifth perspective. Prior balanced scorecard research also assumes negative past environmental performances. In such settings, and when low management communication levels exist on the importance of environmental strategic objectives (a common practitioner scenario), environmental measures receive less decision weight when they are grouped in a fifth scorecard perspective. However, a positive environmental reputation would generate loss aversion concerns with reputation, leading to more decision weight given to environmental measures. Participants (N=138) evaluated performances with scorecards in an experimental design that manipulates scorecard format (four, five-perspectives) and past environmental performance operationalizing reputation (positive, negative).

The environmental reputation valence’s impact is more (less) pronounced when environmental measures are grouped (embedded) in a fifth perspective (among the four traditional perspectives), when the environmental feature of the measures is more (less) salient.

Findings provide the literature with original empirical results that support the popular, but often anecdotal, position of advocating a fifth perspective for environmental measures to help emphasize and promote environmental stewardship within an entity when common low management communication levels exist. Specifically, when positive past environmental performances exist, entities may choose to group environmental performance measures together in a fifth scorecard perspective without risking those measures receiving the discounted decision weight indicated in prior studies.

This paper compares and contrasts practice-based perceptions of the research–practice gap in the United States (US) with those in Australia.

The current study extends the work of Tucker and Lowe (2014) by comparing and contrasting their Australian-based findings with evidence from a questionnaire survey and follow-up interviews with senior representatives of 18 US state and national professional accounting associations.

The extent to which academic research informs practice is perceived to be limited, despite the potential for academic research findings to make a significant contribution to management accounting practice. We find similarities as well as differences in the major obstacles to closer engagement in the US and Australia. This comparison, however, leads us to offer a more fundamental explanation of the divide between academic research and practice framed in terms of the relative benefits and costs of academics engaging with practice.

Rather than following conventional approaches to ‘bridging the gap’ by identifying barriers to the adoption of research, we suggest that only after academics have adequate incentives to speak to practice can barriers to a more effective diffusion of their research findings be surmounted.

This study makes three novel contributions to the “relevance literature” in management accounting. First, it adopts a distinct theoretical vantage point to organize, analyze, and interpret empirical evidence. Second, it captures practice-based views about the nature and extent of the divide between research and practice. Third, it provides a foundational assessment of the generalizability of the gap by examining perceptions of it across two different geographic contexts.

We document the relationship between size, the presence of a full-time accountant, strategy, and the adoption of management control systems (MCSs) in small- and medium-sized Canadian manufacturing enterprises (SMEs).

Using survey results from 247 Canadian SMEs, we use partial least squares to holistically test our model and also present data for each MCS.

We find that the presence of a professional accountant is strongly associated with the adoption of MCSs and is a significant explanatory variable more often than either size or strategy.

While the impact of organization and strategy has been extensively studied within large organizations, we investigate these relationships within SMEs. Additionally, we investigate the impact of having a full-time accountant, a constraint unique to SMEs due to their limited resources.

Limitations include the fact that we likely have a significant survivor bias as the average age of our sample firms was 30 years. Our analysis of nonresponse bias does not allow us to conclude that such a bias did not exist. Also, it is possible that some respondents believed they had a certain MCS when others might think they did not.

This study will be of interest to owners/managers of manufacturing SMEs, their advisors, and economic development agencies. Our study also has implications for accounting education as most students will work for SMEs.

Few studies have documented the MCSs adopted by North American SMEs, and none have considered the impact of the presence of a full-time accountant.