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Advancing Empirical Research in Management Accounting. Christopher D. Ittner. Is Empirical Research in Management Accounting Declining?. All Management Accounting Publications in TAR, JAE, JAR, CAR, RAST, JMAR, and AOS 1990-1996 (Shields, JMAR 1997) – mean = 21.71 per year

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Is empirical research in management accounting declining
Is Empirical Research in Management Accounting Declining?

  • All Management Accounting Publications in TAR, JAE, JAR, CAR, RAST, JMAR, and AOS

    • 1990-1996 (Shields, JMAR 1997) – mean = 21.71 per year

    • 2002-2004 (excluding review papers) – 48.3 per year

  • All Empirical Management Accounting Publications (Archival, Survey, Field Study)

    • 1990-1996 (Shields, JMAR 1997) – 9.57 per year

    • 2002-2004 – 24.0 per year

    • 2002-2004 (excluding executive compensation studies) – 17.33 per year

Note: Shields (1997) only includes papers by North American authors,

and excludes executive compensation studies

Is empirical research in management accounting declining1
Is Empirical Research in Management Accounting Declining?

  • The number of empirical management accounting papers in The Accounting Review increased from 3 to 17 from 1999-2001 to 2002-2004

  • Other observations

    • Editors of the major journals seem much more inclined to accept management accounting papers

    • Top journals in other fields are accepting related papers (e.g., Management Science, Journal of Marketing, ASQ, AMJ, etc.)

    • The feeling that a field’s research contributions are not being recognized is not unique to management accounting researchers

Moving forward
Moving Forward …

  • The onus is on management accounting researchers to improve the quality and contribution of empirical research

    • Research questions and motivation

    • Methodological issues

    • Data acquisition

    • Conjectures about the future direction of management accounting research

Research questions and motivation
Research Questions and Motivation

  • What makes a good research question?

    • The topic is interesting to the reader

    • The question is motivated by theory, not just changes in practice

    • The answer is not obvious

    • The topic has not been over-examined (e.g., cost driver studies, studies linking non-financial measures to future financial performance) -- unless some argument can be made that the research question, setting, or design is unique and provides new insight

Research questions and motivation1
Research Questions and Motivation

  • Motivating the study is the key to acceptance

    • Why should the reviewer/reader care about this study?

    • What are the specific contributions of this study to the literature?

    • Why is this accounting?

  • Are empirical management accounting research questions just consulting?

    • There is nothing intrinsically wrong with consulting projects providing the basis for research studies (is financial accounting anomalies research any different?)

    • The keys are whether the project addresses an important research question, is objective, and provides a useful method for examining the question of interest

Research questions and motivation2
Research Questions and Motivation

  • Should fads drive management accounting research questions?

    • New practices/fads are useful means for motivating studies, if they can be tied to broader theories of interest to accounting researchers

    • The problem with chasing fads – they tend to close important avenues of research before they have been fully investigated (e.g., ABC)

An example recommended directions for managerial accounting research 1997
An Example-- Recommended Directions for Managerial Accounting Research (1997)

  • Managerial accounting and organizational change

  • Strategic accounting

  • Accounting in horizontal and “learning” organizations

  • Broader organizational and inter-organizational accounting

  • Integrated, causal performance measures and decision support systems

  • Managerial accounting and organizational structure

  • Integrative research

Sources: Shields; Atkinson et al.

JMAR 1997

Research questions and motivation3
Research Questions and Motivation Accounting Research (1997)

  • Progress in management accounting will require developing research questions that incorporate multiple theoretical perspectives

    • Economics

    • Psychology

    • Sociology

    • Operations

    • Information technology

An example executive compensation
An Example– Executive Compensation Accounting Research (1997)

  • Most empirical studies are based on economic explanations that assume rational/optimal behavior

  • Why is the explanatory power so low for some of the key predictor variables?

  • What is the role of compensation consultants?

  • What alternative explanations exhibit a similar level of explanatory power?

    • Fixed number or constant value of stock options granted each year

    • Managerial power

    • Simple benchmarking to consulting surveys

    • Other “naïve heuristics”

Methodological issues
Methodological Issues Accounting Research (1997)

  • Endogeneity

    • Frequent criticism of empirical management accounting research

    • Common to all empirical accounting research

    • Textbook solution is known, but almost impossible to “solve” in real-world applications

  • Recommendations

    • Acknowledge the problem and try to minimize

    • Tests for endogeneity

    • Explanatory power of instruments

    • Better explanation for use of instruments

    • See working papers by Chenhall and Moers; Larcker and Rusticus

Methodological issues1
Methodological Issues Accounting Research (1997)

  • Survey research

    • Getting harder to get adequate survey responses (tradeoff between response rate and survey length)

    • Improvements are needed in how management accounting practices are assessed (how would you know a balanced scorecard if you saw one?)

    • Self-reported performance is viewed with skepticism by many reviewers

    • Credibility can be enhanced by using multiple respondents, asking questions with “hard” responses, and linking to other data sources

Methodological issues2
Methodological Issues Accounting Research (1997)

  • New statistical tools are available to examine research questions

    • Structural models

    • Non-linearities

    • Complex interactions

    • “Unmixing” techniques

    • Qualitative data analysis

  • Make sure you are applying these methods correctly!

Many integration opportunities exist
Many Integration Opportunities Exist … Accounting Research (1997)


Primary or secondary data


Classical statistics


Primary data

Psychological or economics

Classical statistics


Primary or secondary data

Various disciplines

Exploratory analysis

Data acquisition
Data Acquisition Accounting Research (1997)

  • Potential data sources

    • School and professional contacts

      • What’s in it for them?

    • Faculty members in other departments

    • Internet

      • Many companies will give access to academics for free or for a reduced rate

      • Do the strengths overcome the weaknesses?

    • Disclosure requirements

      • Proxy disclosures (exploit international differences in practices and disclosure requirements)

      • Governmental organizations

      • Regulated industries

  • Don’t be afraid to ask for data!

Conjectures on the future of empirical management accounting research
Conjectures on the Future of Empirical Management Accounting Research

  • It is increasingly difficult (and probably unnecessary) to distinguish between management accounting studies and studies in other accounting fields (financial, audit, tax, systems)

    • Corporate governance and risk assessment

    • Executive compensation

    • Disclosure policy and requirements (nonfinancial information, compensation and governance practices, etc.)

    • Value drivers/value relevance

    • Impact of financial accounting and tax rules on internal practices and decision-making

    • Integrated systems

An example current governance and control practices
An Example-- Current Governance and Control Practices Research

  • Clearly defined policy framework, policies, and procedures (58%)

  • Harmonized financial and management accounting (55%)

  • Well-defined framework for making and managing decisions (54%)

  • Risk management processes and tools (53%)

  • Harmonized internal and external reporting (52%)

  • Integrated strategic and operational planning (52%)

  • Performance management framework (48%)

  • Good visibility of accounting processes, systems, and controls (40%)

  • Appropriate controls embedded in all processes and supporting technologies (39%)

  • Accelerated reporting and close (39%)

Source: IBM Business Consulting, 2003

Another example information technology
Another Example– Information Technology Research

  • Top Managerial Accounting Initiatives

    • ERP implementation

    • New reporting software

    • New budgetary procedures

    • Financial consolidation

    • New analytic software

    • Outsourcing back office

  • Uses of Information Technology for Value Creation

    • Exploiting full functionality of ERP (19% today, 68% in three years)

    • Leveraging ERP data for performance management (22% today, 66% in 3 years)

    • Online processing (41% today, 63% in 3 years)

    • Web-based settlement (15% today, 35% in three years)

    • Intelligent scanning (straight to ERP) (10% today, 34% in 3 years)

Sources: Ernst & Young (2003)and IBM (2003)

Conjectures on the future of empirical management accounting research1
Conjectures on the Future of Empirical Management Accounting Research

  • Studies using multiple methods (e.g., quantitative and qualitative; analytical and empirical, etc.)

  • Company-specific field studies that incorporate both data analysis and institutional details/qualitative analysis

  • Topics at the interface of financial and managerial accounting

  • Greater focus on interdisciplinary research

    • Joint research

    • Publishing in non-accounting journals