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Samenvatting management accounting (E_EBE2_MANAC)
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Voorbeeld van de inhoud
Management accountingPapers:
Paper 1: business modelling/causal maps (campbell et al)
Main question: how successful is our strategy?
which strategy: the strategy a company introduces, from convenience stores, what they tried to do is
to make the store more interested for customers, they want it to be more fun for the customers to
be there so they would sell more what will lead to higher financial performance
- Does it lead to improved final performance?
o If not why not?
Strategy well implemented but does not lead to higher performance?
Strategy badly implemented?
Lack of high quality resources to implement strategy successful?
They evaluate these questions based on data-analytics with the help of a BSC data and a
BSC/strategy map relations are tested
Overview models:
The different hypothesis:
1) asking the question does the strategy work. The strategy inputs are measured with how well
the strategy is executed in the individual stores. If this is improving does this lead to higher
financial performance? the answer is: no, the strategy does not work why?
2) The strategy is not implemented well? The customers do not see it. (the reason why it works
or does not work)
3) Maybe the customers are seeing what we are trying so they are longer in the store but they
are not buying any more products. So they are staying longer so that part of the strategy
works but they are not buying more products so the revenue is not going up. (the reason why
it works or does not work)
, 4) In this paper they also analyse whether the capabilities of the crew/store managers whether
this has an impact on the link between strategy input on the customer outcomes. Maybe if
there is no positive effect between H2 but maybe if the in stores where the managers are very
capable the new strategy is actually workink
5) This is the same as hypotheses 4 about the capabilities of the crew/store managers. Does this
mean that the revenues are improving (h3) if the customers does understand the strategy and
they are staying longer does this in a store with capable managers mean they are buying
more.
Variables:
- Financial performance: profit per square meter of the store
- Customer outcomes: does the customer see the strategy based on survey question from
3th parties.
- Strategy inputs: audit (whether this is the case in all these stores) based on compliance
with operating standards related to strategy
- Internal capabilities: 5 point subjective scores
o Manager capabilities (how does he interact with the crew and does he use
technology and how?
o Crew capabilities: how does the crew interact with customers
Results:
H1: does the strategy work: the p value of the input differences is higher than 0.10 so there is no
significant effect that input differences actually are explaining the differences of profit in all of these
stores. They use a lot of controls they know that the level of competition has an influence of the
profit so we see that this p value is lower than 0.10. competition is negative relation. Population is a
positive relation. A larger store is having a lower profit per square. And if the rent per square meter is
higher there is more profit on a square meter store.
H2/H4: complementary (skills*strategy) H4: relation between strategy input and customer
outcomes depends on skills employees (=internal capabilities) the interpretation: strategy only works
in combination with skilled employees
- Moderating variable: the internal capabilities of management and crew.
- It doesn’t depend on the internal capabilities because the p values are not significant
- So the H4 has no effect
H3/H5: the second part of the graph: if the customers are happy do we have a higher financial
performance? And is this moderated by the internal capabilities?
- The outcome differences is negative, the p-value is lower than 10% so it has a negative
effect on the profit
- But we see that there is a moderating effect og the capabilities of the crew, if the
capabilities are increasing than
o For low values of crewskills than is the outcome differences negative
, o For very high crew skills the implemented strategy leads to a positive impact on
the financial performance. the crewskills is very important for the success of
this strategy
- We do not find the same result for the capabilities of the managers this is not
significant.
Summary:
- The new strategy does (on average) not lead to improved financial outcomes (H1)
- On average the strategy does not lead to improved customer outcomes (H2)
- Improved customer outcomes only leads to improved financial performance is skills
(crew) are high (H5)
o The crew needs to increase sales from the more happy customers
Paper 2: financial and non financial measures in reward contract ( O’Connell & O
‘Sullivan)
They analyse: should non financial measures should it concluded of a compensation contract of a
CEO a CEO has a compensation contract with concluded the salary, bonuses, etc. and these
performance dependent pays should be based on performance measured. Normally financial
measures but the question is should not financial measures also be included in the contract.
Main questions:
- When are non-financial measures used in CEO bonuscontract?
- Does non financial use in contract lead to future shareholder value?
The relationship is not always the same for each type of company
Two important factors:
- Information content?
o Does non-financial measure influence future financial performance?
=lead-lag strength
- Impact CEO on design of his own bonus system?
What type of measures are included in performance contracts? All list of firms need to report on
which measures they based there policies. Is should be disclosed.
Theory/expectations:
- Do companies use non-financial measures (NF) because:
o NF’s are ‘rational’ (= predict information future)?
o Because NF are ‘easy’ to manipulate (camouflage)?
- Does NF usage influence future shareholder value?
H1: strong lead-lag relation leads to greater weight on NF
- Lead-lag strength: whether the customer satisfaction is indeed a predicter for future
financial performance. They are expecting that it is stronger when the lead lag strength is
higher (moderator)
, H2: if H1 (so they are using customer satisfaction because the lead lag strength is high
compensation relevance) then NF usage leads to future shareholder value
Data:
- Sample: H1: 1994-2005, H2: 2006-2010
- NF: customer satisfaction measure of American Customer Satisfaction Index (ASCI)
o Cs: measure collected for many firms over multiple years
o They used surveys
- CEO compensation:
o Short term: salary + bonus
o Total: ST + stock + options + LT incentives
- Growth in shareholder value: stock returns t+2 (2 years afterwords wheter there is a
grow)
- Compensation relevance: CS in contract because it has information content? (does is has
a strong lead-lag? Than it is relevance)
Results:
H1: lead lag strength weight NF
whether a strong lead lag relationship is predicting a future financial performance if this is the
case the weight NF is increasing.
We see that customer satisfaction * lead: is positive and significant this means if customer
satisfaction is going up this should only lead to more compensation if the lag strength is also high.
Otherwise it should not lead to higher compensation. It does influence the total compensation and
the short term compensation.
Controls:
- ROA: if this is higher than the manager is having a higher compensation this is
significant.
- Return is based on the shareholder performance if this is increasing it only has an
impact on the short term compensation.
- Firm sizes increasing has impact on total compensation and on short-term
compensation
H2: relevance (strong predictor of future shareholder value(great so the value will increase))
Camouflage technique: it is in the contract but not because it is providing information but simply
because the CEO thought it would help to get to have some easy targets, then the shareholder value
will not increase in the future
The dependent variable is: shareholder value
If compensation relevance is high (so it is having additional information for the future) than if the
compensation for the CEO is increasing than it will lead to future shareholder value it is significant
and positive. Is the total compensation and the short-term compensation.
if the relevance is low but the CEO still get a compensation than this does not lead to future
shareholder value than it is just camouflage
Conclusion:
- Often a combination of financial and non-financial measures in CEO contracts
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