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The purpose of this study is to use a steady-state model structure to investigate earnings management (EM) theoretically in the context of different expense theories. Empirically, the objective is to apply the theoretical model to investigate the implicit choice of expense theories for reporting expenses. The study aims to present a new approach to analyze EM.

The study makes use of ten-year time-series data originally from 1,015 Finnish public and private firms to estimate the parameters of the steady-state model, and to investigate which expense theories the firms implicitly follow in financial reporting. The parameters are estimated using the restricted least squares regression method. The final sample included data from 631 firms fulfilling restrictions for the consistency of estimates.

The paper provides empirical insights about expense theories that Finnish firms implicitly follow in financial reporting. Evidence shows that the reporting of expenses mainly follows the units-of-revenue and the rate-of-return theories. Only a small number of firms follow the interest expense theory.

The study is based on a steady-state approach, and therefore, the research results may lack generalizability as only 62% of the original sample firms obtained consistent estimates. Therefore, researchers are encouraged to use more general models for further theoretical and empirical work.

The paper includes implications for a new approach to EM. It also gives implications how to analyze different expense theories in the context of EM both theoretically and empirically.

This paper develops a new approach to investigate EM.

The purpose of this study is to introduce a matching function approach to analyze matching in financial reporting.

The matching function is first analyzed analytically. It is specified as a multiplicative Cobb-Douglas-type function of three categories of expenses (labor expense, material expense and depreciation). The specified matching function is solved by the generalized reduced gradient method (GRG) for 10-year time series from 8,226 Finnish firms. The coefficient of determination of the logarithmic model (CODL) is compared with the linear revenue-expense correlation coefficient (REC) that is generally used in previous studies.

Empirical evidence showed that REC is outperformed by CODL. CODL was found independent of or weakly negatively dependent on the matching elasticity of labor expense, positively dependent on the material expense elasticity and negatively dependent on depreciation elasticity. Therefore, the differences in matching accuracy between industries emphasizing different expense categories are significant.

The matching function is a general approach to assess the matching accuracy but it is in this study specified multiplicatively for three categories of expenses. Moreover, only one algorithm is tested in the empirical estimation of the function. The analysis is concentrated on ten-year time-series of a limited sample of Finnish firms.

The matching function approach provides a large set of important information for considering the matching process in practice. It can prove a useful method also to accounting standard-setters and other specialists such as managers, consultants and auditors.

This study is the first study to apply the new matching function approach.

The purpose of this study is to analyze the business-failure-process risk from two perspectives. First, a simplified model of the loss-generation process in a failing firm is developed to show that the linear system embedded in accounting makes financial ratios to depend linearly on each other. Second, a simplified model of the development of the risk during the failure process is developed to introduce a new concept of failure-process-risk line (FPRL) to assess the systematic failure risk of a firm. Empirical evidence from Finnish firms is used to test two hypotheses.

This study makes use of simple mathematical modeling to depict the loss-generation process and the development of failure risk during the failure process. Hypotheses are extracted from the mathematical results for empirical testing. Time-series data originally from 13,082 non-failing and 515 failing Finnish are used to test the hypotheses. Analysis of variance F statistics and Mann–Whitney U test are used in testing of the hypotheses.

The findings show that the linear time-series correlations are generally higher in failing than in non-failing firms because of the loss-generation process. The FPRL depicted efficiently the systematic failure-process risk through the beta coefficient. Beta coefficient efficiently discriminated between failing and non-failing firms. The difference between the last-period risk estimate and FPRL was largely determined by the approximated growth rate of the periodic failure risk.

The loss-generation process is based on a simple cash-based approach ignoring the growth of the firm. In future research, the model could be generalized to a growing firm in an accrual-based framework. The failure-process risk is assumed to grow at a constant rate. In further studies, more general models could be applied. Empirical analyses are based on simple statistical methods and tests. More advanced methods could be used to analyze the data.

This study shows that failure process makes the time-series correlation between financial ratios to increase making their signals of failure consistent and allowing the use of static classification models to assess failure risk. The beta coefficient is a useful tool to reflect systematic failure-process risk. In addition, it can be used in practice to warn a firm about ongoing failure process.

To the best of the author’s knowledge, this is the first study analyzing systematically business-failure-process risk. It is first in introducing a mathematical loss-generation process and the FPRL based on the beta coefficient assessing the systematic failure risk.

Several scholars have recently highlighted the narrowness of accounting research regarding it as a threat to scholarly developments in the field. The aim of this study was to chart progress in management accounting research using a sample of doctoral dissertations published in Finland. In particular, the study examines the range and diversity of research strategic choices in Finnish dissertations over time, including the topics and methodological and theoretical approaches chosen. The authors also briefly compare findings over time and with other progress studies.

A longitudinal historical investigation was selected. All of the 80 management accounting doctoral dissertations published in Finnish business schools and departments during 1945-2015 were analysed.

The findings reveal that an expansion of doctoral education has led to an increasing diversity of research strategic choices in Finland. Different issues have been of interest at different times; so, it has been possible to cover a wide range of cost, management accounting and other topics and to use different methodological and theoretical approaches over time. Consequently, management accounting has become a rich and multifaceted field of scientific research.

While this analysis is limited to doctoral research in Finland, the results should be relevant in advancing the understanding of the development of management accounting research.

Overall, the findings support the view that there have been, and continue to be, many ways to conduct innovative research in the field of management accounting.

Dissertation research in this field has been extensive and vital enough to educate new generations of academics, guarantee continuity of the subject as an academic discipline and make management accounting a significant academic field of research.

The paper contributes to current research on management accounting change by an analysis of a sample of doctoral dissertations.