Best modern managerial accounting practice of corporate governance awarded firms in Thailand: an empirical investigation of the antecedents and consequences.

Author:Chitmun, Suphansa
Position::Report
 
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  1. INTRODUCTION

    During the last two decades, the dramatic change in business environment, trade liberalization, advancements in manufacturing and information technologies (Isa and Thye, 2006) have caused intense competition to both domestic and international markets. Though, in fact, companies still need to survive and sustain business growth. Accordingly, organizations need to review and revise their strategies especially in management as management is critical to firm survival and firm growth. The main objective of management is to enable people to be capable of joint performance of people through common goals, common values and right structure. Furthermore providing the training and development they need to perform and respond to the change (International Federation of Accountants, 1998). Consequently, the management process consists of planning, organizing, staffing, directing and controlling functions. All of these are taken care of by managerial accounting practice (Azhar and Abdul Rahman, 2009). The role for the managerial accounting practice is to prepare management accounting information for correct management decisions and to be applied to improve organizational performance (Mia and Clarke, 1999). Therefore, effectiveness of managerial accounting practice is important to the success of the companies. An appropriate management decisions leading to the profit maximization, and also returns on shareholders' investment (Alleyne and Weekes-Marshall, 2011).

    Changes in competition and business environment have been advocated as graceful pressures for the change in managerial accounting practice (Joshi, 2001). Furthermore, the organizations could successfully develop both radical and incremental innovations for managerial accounting positively impact sustained competitive advantage and dramatically improving their chances of survival and success in both dynamic and stable environments (Han, Kim and Srivastava, 1998). Therefore, nowadays a recognizing role of management accounting practice may not be traditional and non-responsive to the needs of businesses under intense competition (Isa, 2007). This may lead to the demise of the traditional managerial accounting practice. Thus, the methods of best modern managerial accounting practice appropriate for businesses to promote and support the operations of the business efficiently and effectively under the environment of severe market competition. Managerial accounting practice is recognized and important to the success of the organization (Alleyne and Weekes-Marshall, 2011). Moreover, the benefit of modern practice enhances the ability of organizations to achieve organizational objectives (Sulaiman, Ahmad and Alwi, 2004) and also increase the value of economic sustainability of the business (Chenhall and Morris, 1995). Therefore, best modern managerial accounting practice is a valuable service supporting a wide range of strategic and tactic management decisions (Valanciene and Gimzauskiene, 2007). In addition, best modern managerial accounting practice could be influenced on the value creation such as employees, customers, and shareholders. However, the value creation depends on the level of operations and the ability of organizations (Valanciene and Gimzauskiene, 2007). In summary, to succeed in the present dynamic business environment, organization should focus on best modern managerial accounting practice.

    Best modern managerial accounting practice is relatively recent and important development in the general area of management accounting. Previous studies about modern managerial accounting practice focused on the survey about the use of managerial accounting practice (Joshi, 2001; Wu, Boateng and Drury, 2007; Angelakis, Theriou and Floropoulos, 2010; Alleyne and Weekes-Marshall, 2011). Some studies investigated an important factor that influences modern managerial accounting practice (Shields, 1998; Haldma and Laats, 2002; Isa and Thye, 2006; MacArthur, 2006; Chia and Koh, 2007; Wu and Boateng, 2010). In addition, other studies focused on the benefits received from modern managerial accounting practice (Valanciene and Gimzauskiene, 2007; France, 2010). Currently, managerial accounting practice literature still lack empirical evidence for investigating the relationship between antecedents and consequences of best modern managerial accounting practice. Moreover, the concept and key components of best modern managerial accounting practice are neither cleared nor covered to explain the phenomenon of best modern managerial accounting practice. Therefore, the relationships between antecedents and consequences of best modern managerial accounting practice are necessary for academic researches to investigate and to verify. From the aforementioned discussion, this is an origin of motivated reasons for this study.

    According to the importance of best modern managerial accounting practice, this study, best modern managerial accounting practice refer to a variety of modern methods of management accounting as to support the organizations management which cause the potential of management and lead to competitive advantage. Here, best modern managerial accounting practice has six dimensions, namely, financial disclosure quality, allocation accuracy awareness, segmentation responsibility efficiency, environmental reporting effectiveness, management technique integration, performance appraisal achievement. Therefore, the main objectives of this study are as follows: (1) to investigate the relationships between best modern managerial accounting practice and ongoing firm stability, (2) to examine the effects of each dimension of best modern managerial accounting practice on information advantage diversity, valuable unique decision making, and operational management well-roundedness,(3) to investigate the effects of information advantage diversity, and operational management well-roundedness on valuable unique decision making, (4) to investigate the effects of information advantage diversity, valuable unique decision making, and operational management well-roundedness on dynamic organization survival and sustainable business growth,(5) to examine the effects of dynamic organization survival on sustainable business growth,(6) to examine the effects of dynamic organization survival and sustainable business growth on ongoing firm stability, (7) to investigate the effects of executive creativity mindset, corporate resource readiness, employee learning experience, and competitive market challenge on each dimension of best modern managerial accounting practice,(8) to examine the moderating effects of business circumstance understanding on executive creativity, corporate resource readiness, employee learning experience, and competitive market challenge--each dimension of best modern managerial accounting practice relationships, and (9) to test the moderating effects of organizational adaptation competency on information advantage diversity, valuable unique decision making, and operational management well-roundedness --dynamic organization survival and sustainable business growth relationships.

    Thus, the key questions of this study are as follows: (1) how does best modern managerial accounting practice has an impact on ongoing firm stability? (2) how does each dimension of best modern managerial accounting practice influence information advantage diversity, valuable unique decision making, and operational management well-roundedness? (3) how do information advantage diversity and operational management well-roundedness have an influence on valuable unique decision making? (4) how do information advantage diversity, valuable unique decision making, and operational management well-roundedness affect dynamic organization survival and sustainable business growth? (5) how does dynamic organization survival have an influence on sustainable business growth? (6) how do dynamic organization survival and sustainable business growth have an influence on ongoing firm stability? (7) how do executive creativity mindset, corporate resource readiness, employee learning experience, and competitive market challenge affect each dimension of best modern managerial accounting practice? (8) how does business circumstance understanding moderate executive creativity mindset, corporate resource readiness, employee learning experience, competitive market challenge--each dimension of best modern managerial accounting practice relationships? (9) how does organizational adaptation competency moderate information advantage diversity, valuable unique decision making, operational management well-roundedness--dynamic organization survival and sustainable business growth relationships?

    This study is organized as follows: Firstly, the relevant literature and the theoretical framework are reviewed to describe the conceptual model and develop the related hypotheses for testing. Secondly, the research methods including sample and data collection, measurement, statistics and equations to test the hypotheses are provided. Thirdly, the empirical results and discussion are demonstrated. Finally, the contribution, limitations and suggestions for future research and conclusion are discussed.

  2. THEORETICAL FOUNDATION

    To clearly understand the relationships among all constructs, both knowledge-based theory of the firm and contingency theory are applied to explain the relationships between the antecedents and consequences of best modern managerial accounting practice. Each of which is detailed as the following.

    2.1 The Knowledge-Based Theory of the Firm

    The knowledge-based theory of the firm considers knowledge as the most strategically significant resource of the firm that is usually difficult to imitate and socially complex also heterogeneous knowledge bases and capabilities among firms are the main determinants of sustainable competitive advantage and lead to superior performance (Teece, Pisano and Shuen, 1997...

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