فشار بدهی و استفاده تعاملی از سیستم های کنترل
Abstract
1- Introduction
2- Conceptual background and literature review
3- Hypotheses development
4- Method
5- Results
6- Discussion and conclusions
References
Abstract
We study if debt pressure drives the use of interactive management accounting and control systems (MACS) and its consequences. We build on Simons (1990) and argue that financing pressures can threaten strategic investment. To alleviate debt pressures and reduce information asymmetries with lenders, managers are predicted to increase the interactive use of MACS. However, because individual MACS have different features, not all interactive use of individual MACS equally serves to assuage debt pressures. We predict that firms facing high debt pressure interactively use traditional MACS and that when individual MACS use befits the level of debt pressure, firms benefit by experiencing future decreases in their cost of debt. Our findings confirm these predictions. We contribute to the literature by showing that pressures from external stakeholders influence interactive use. We also suggest a new relevant firm outcome affected by MACS use: the future cost of debt. Finally, in additional analyses, we show that concerns over innovation may lead managers to choose apparently non-optimal MACS for interactive use, consistent with managers often juggling conflicting pressures.
Introduction
We examine whether debt pressure influences interactive management accounting and control systems (MACS). Debt pressure means increased scrutiny and information demands from lenders who are concerned about the firm’s financial health. MACS provide information useful in decision-making, planning and evaluation (Merchant and Otley, 2006), and their interactive use allows senior managers to involve themselves, regularly and personally, in the decision activities of their subordinates, fostering the emergence of opportunities to challenge and debate data, assumptions, and action plans (Simons, 1995, 2000). Hence, the use of interactive MACS is critical in risky environments (Widener, 2007; Tessier and Otley, 2012; Janke et al., 2014), and thus, potentially, as a mean to respond to lenders’ information demands and concerns. However, lenders are not equally interested in the information provided by all MACS, rather, their information needs are narrow and focused on those data that help them estimate changes to the firm probability of default. In this paper, we build on Simons (1990), who argues that interactive use serves to focus the attention of the entire organization on the information that top managers consider of strategic importance, and we propose that interactive MACS are influenced by the information demands and pressures from external stakeholders, namely lenders. In particular, we argue that the relative importance of debt financing (i.e., debt pressure) represents a key strategic uncertainty that can derail firm financing and investment, and hence, managerial vision of the future. We expect this is a determining factor in the use of MACS and its consequences. This argumentation is in contrast with the main body of research in this area that almost exclusively takes an internal perspective (e.g., Abernethy et al., 2010; Su et al., 2015; Heinicke et al., 2016). When firms face financing constraints, the relationship with finance providers becomes crucial for survival and continuous investment, particularly in private firms. In firms with limited access to public capital markets, lenders have access to top managers (and middle managers and often, to employees) and they can demand frequent (even weekly) updates on key financial ratios (Berry et al., 1993). That is, lenders have a position to exert real pressure and induce full disclosure from top managers. Failure to timely procure this information may lead to a deterioration of future debt terms, threatening firm survival.