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A Brief Overview of the Book
They also pointed out that the need for convergence of FA and MA is particularly high for those investor-oriented companies, such as companies that have adopted IAS/IFRS. Inspired by these latter considerations, the present research has proposed possible theoretical explanations for the convergence of FA and MA.
Theoretical Contributions of the Present Work
Empirical findings (for the controller database) revealed that accounting system integration plays a mediating role between the level of ERP integration and perceived FA quality. In a similar way, accounting system integration also mediates the relationship between the level of ERP integration and the quality of MA as perceived by controllers.
Practical Contributions of the Present Work
In addition, accounting system integration also appears to mediate the relationship between IAS/IFRS adoption and FA quality as perceived by supervisors.
Structure of the Book
Healy PM, Palepu KG (2001) Information asymmetry, corporate disclosure and the capital markets: a review of the empirical disclosure literature. McGraw-Hill, Milano Ika¨heimo S, Taipaleenma¨ki J (2010) The divergence and convergence of financial accounting and management accounting - institutional analysis of the US, Germany and Finland.
Introduction
Financial Accounting: A Possible Framework
Financial Accounting: An Objective Perspective
1, stated that: "The primary focus of financial reporting is information about earnings and its components". IAS/IFRS define flexible financial reporting schemes that can be changed by firm managers, thereby increasing the discretion of those preparing financial reporting (Bauer 2007).
Financial Accounting: A Subjective Perspective
Finally, differences between countries could affect the results of FA reporting (Francis et al. 2003; Leuz 2003; Bushman et al. 2004). These relationships with external stakeholders are conducted by hosting webcasts, conference calls, one-on-one meetings, and presentations (Francis et al. 1997; National Investor Relations Institute 2004; Bushee et al. 2004, 2011).
The Role of Voluntary, Non-financial and Forward-Looking
Mandatory and Voluntary Disclosure
However, voluntary disclosure can be considered a supplement and not a substitute for mandatory disclosure (Ball et al. 2012). 2.1, the other side of the first level of analysis of FA information is represented by voluntary disclosure.
Financial and Non-financial Information
To confirm this trend, some researchers have emphasized that even financial analysts seem to perceive the relevance of non-financial information. Indeed, they have begun to use and evaluate non-financial indicators (Previts et al.1994; Rogers and Grant 1997; Breton and Taffler2001).
Forward-Looking and Historical Information
18“The general confidence in these articles and reports is that there is a need for more information that is forward-looking and non-financial in nature. Examples of non-financial and forward-looking information are therefore the disclosures in the field of intellectual capital and CSR.
Theories for Supporting and Containing the Evolution
- Agency Theory
- Signalling Theory
- Legitimacy Theory
- Constraints on Additional Disclosure
The purpose of the voluntary disclosure is therefore to demonstrate the company's positive performance to the market, thereby improving the quality of the FA's overall disclosure (Watson et al.2002).28. The signal theory, devised to explain labor market behavior, can be used to explain voluntary disclosure (see Figure 2.3); it also addresses problems of information asymmetry in the marketplace (Spence 1974; Ross 1977; Watts and Zimmerman 1990).
Internal Determinants of Financial Accounting Development
Institutional Theory
In addition, an example of normative pressure that can bring about relevant changes in FA is the hiring of people from other organizations who can provide innovative tools to develop and produce FA information. A final example of mimetic pressure that could bring about relevant changes in FA is the ability to imitate other similar organizations in producing and disclosing additional information.
Corporate Governance and Culture
Ho SSM, Shun Wong K (2001) A study of the relationship between corporate governance structures and the extent of voluntary disclosure. Institute of Corporate Directors (1992) Guidelines for Corporate Directors in Canada, Toronto Ismail TH (2002) An Empirical Investigation of Factors Affecting Voluntary Disclosure of.
Introduction
A Promising Relationship
- The Debut of “Control”
- The Internal Control System
- A Brief Focus on Management Accounting
- The Link Between Financial Accounting and Internal
- The Virtuous Circle Between the Forward-Looking
This definition of control can be seen as an antecedent to the definition of the concept of internal control system (Sec.3.2.1). One of the most common and technical definitions of internal control system is proposed by the COSO report.3.
Premises for the Convergence
Premises for Convergence in an International Setting
Furthermore, some studies have found that developmental pathways that have influenced FA can also influence MA (Scherrer1996; Virtanen et al.1996). They also agree that this relationship deserves further investigation (Joseph et al. 1996).
Premises for Convergence in the Italian Setting
While the previous literature review agreed on the fact that FA is able to influence MA, few studies seem to have been conducted on the opposite relationship,21 according to which MA is able to influence the evolution of FA information. Therefore, while the previous literature review agreed on the fact that FA is able to influence MA (especially thanks to the introduction of IAS/IFRS25), few studies seem to have been conducted on the inverse relationship, according to which MA is able to influence in the evolution of FA information (see Fig.3.2).
Convergence or Divergence of Financial Accounting and
Ika¨heimo S, Taipaleenma¨ki J (2010) Divergence and Convergence of Financial Accounting and Management Accounting - An Institutional Analysis of the USA, Germany and Finland. Harper Business, New York Taipaleenma¨ki J, Ika¨heimo S (2013) On the convergence of management and financial accounting – the role of information technology in accounting change.
Introduction
Institutional Theory in Support of the Convergence Process
In addition, imitation could facilitate the convergence process of FA and MA (DiMaggio and Powell1983; Ika¨heimo and Taipaleenma¨ki 2010). According to this framework, the above-mentioned pressures could influence the developmental trajectories of both FA and MA, thereby promoting alignment of FA with MA.
The Viewpoints of Professional Associations and Academics
IAS/IFRS: A Possible Driver of the Convergence
Such types of information are based on internal management reports, in the direction of both identifying operating segments and measuring disclosed segment information (for further details on segment reporting see among others: Bens et al. 2011; Nichols et al. 2013). Part of the literature has observed that firms may voluntarily adopt IAS/IFRS as they are perceived to be superior to most local GAAP (Ashbaugh and Pincus2001; Leuz2003; Ding et al.2007; Barth et al.2008; Daske et al. .2008 ).
Fair Value: A Possible Driver of the Convergence
In a similar way, Whittington identified the following main characteristics and implications of fair value: (1) utility for economic decisions; (2) greater focus on current and future investors and creditors; (3) more interest in forecasted future cash flow; (4) adequacy and reliability of FA information; and (5) the need for accounting information to reflect the future (Whittington 2008). Another problem may be fair value measurement at Level 3 (FASB 157), as it is characterized by a lack of reliability and may be subject to bias and abuse (Magnan 2009).
The Role of Information Technology on the Convergence
12The main studies that focused on the effects that ERP adoption can cause on financial performance were by Poston and Grabski (2001), Hunton et al. Taipaleenma¨ki J, Ika¨heimo S (2013) On the convergence of management accounting and financial accounting – the role of information technology in accounting change.
Introduction
Research Hypotheses and Research Design
- ERP and the Convergence of Financial Accounting
- IAS/IFRS and the Convergence of Financial Accounting
- Integration of Accounting Systems
- The Research Design
Furthermore, some literature in this framework has analyzed the effects of the adoption of IAS/IFRS on the quality of the accounting system (Christensen et al. 2015; Paananen and Lin 2009; Liu et al. 2011). The literature agrees that harmonization of accounting standards has represented a major incentive for convergence between MA and FA (Marchi et al.2008; Quagli2011; Zambon2011; Taipaleenma¨ki and Ika¨heimo2013).
Sample Selection and Data Collection
First, six in-depth pilot interviews were conducted to obtain early qualitative feedback and better refine the research design, research hypotheses, and subsequent survey (Chen et al. 2010). The main aim of the research was to test the research design previously established through pilot interviews and to generalize the empirical results to enrich the current literature on the topic (Gable 1994).
Variable Measurement
Exogenous Variables
Endogenous Variables
Regarding this variable, the survey question was: To what extent do you perceive an improvement in the quality of FA due to a high level of integration between FA and MA. Regarding this variable, the survey question was: To what extent do you perceive an improvement in the quality of MA due to a high level of integration between FA and MA.
Control Variables
The measurement of the perceived quality of MA is determined based on Weißenberger and Angelkort's definition regarding controllership output quality, which “measures the quality of the outputs of the controlling department in terms of, for example, scope, timeliness or accuracy as perceived by management". Unlike the authors mentioned above, who used six reflective indicators to measure the quality of controllership outputs, the current work measures the perceived quality of MA through managers' perceptions of the level of overall quality of MA information due to a high level of MA information integration between FA and MA.
Pilot Interviews: Preliminary Analysis
Financial Accountant Interviews
The preliminary findings from the interviews show that the role of the financial accountant is gradually changing. On the other hand, the new role of the financial accountant is enriched with new activities, coupled with the need to have more relationships with the other business functions.
Controller Interviews
This type of information is considered to be functional to facilitate the understanding of the relationship between the company's performance and the management results. Therefore, I need to make adjustments to compare the company's performance that we disclose to the external market and our company's economic and financial results.
Survey Analysis
Descriptive Statistics
Tables and 5.6 show some descriptive statistics for the research and control variables for the entire dataset and for the subdatasets related to financial accountants and controllers; Table 5.7 shows descriptive statistics for the components of the Accounting System Integration variable for the entire dataset, while Table 5.8 shows the frequency distribution (in %) for the components of the Accounting System Integration variable for the entire dataset, demonstrating that Italian managers have not yet perceive full and deep tuning between FA and MA because the values for each component are not that high. This means that both integrated ERP and IAS/IFRS are correlated with the integration of the accounting system.
Statistical Model
PLS-SEM provides estimates of relationships between variables and constructs (measurement model) and between constructs (structural model) (Kallunki et al. 2011). Taking advantage of the aforementioned advantages due to the use of the PLS-SEM method, Hair et al.
Reliability and Validity of PLS-SEM Models
By analyzing Table 5.13, it is possible to notice that the effect size on Perceived Quality of FA gives a high value for Integration of Accounting System for the entire data set. Furthermore, the effect size of Accounting System Integration is also high for the ERP variable.
Empirical Findings
Furthermore, the direct effect between integration of accounting system and perceived quality of MA is not significant; thus Hp4 (The level of integration of accounting system positively affects the level of perceived quality in MA) is not supported for the entire dataset of respondents (indeed, the relationship is not statistically significant). Hp3 is confirmed for the sub-data set of controllers (direct path coefficient between integration of accounting system and perceived quality of FA: 0.574);.
Introduction
Interesting considerations could come from analyzing the relationships between the integration of accounting systems (a research measure that is a synthesis of the convergence process of FA and MA) and other research variables, thus answering the research question "What is Italian managers". Therefore, based on empirical findings in the Italian context, it seems that the convergence of the two disciplines does not affect the perceived quality of managerial practices and information.
The Antecedents and Consequences of the Alignment
Regarding the relationship between FA alignment with MA and management satisfaction with overall FA quality, the results are consistent with that body of literature that states that accounting systems integration can enhance the perceived quality of financial disclosure (Jones and Luther 2005). This result is consistent with the results obtained by Weißenberger and Angelkort (2011), as they found that there is no direct effect between the integration of accounting systems and the quality of control output, as measured by the quality perceived by department managers. controller.
The Relationship Between the Quality of Financial Accounting
While no direct paths have been found between the level of integration of the accounting system and the perceived quality of MA, interesting considerations emerge from the analysis of the controller database. Indeed, the indirect effect between the integration of accounting systems and the perceived quality of MA is positive and significant; Thus, for auditors, management satisfaction with the quality of the FA mediates the relationship between the integration of accounting systems and management satisfaction with the quality of the MA.
The Viewpoints of Controllers and Financial Accountants
Further Findings: The Mediation Role of the Integration
Practical Implications
From a research point of view, it could be interesting to develop research groups and journals on this topic. From a teaching point of view, it could be interesting to revisit academic programs and introduce the topic of convergence in both FA and MA courses.
Limitations and Further Developments
They are increasingly aware of the importance of a unique business and accounting view, leveraging technological tools, such as ERP, that are able to properly connect different parts and offices of a company, even if they are located in different geographic areas. . Harv Bus Rev DiPiazza SA, McDonnell D, Parrett WG et al (2006) Global Capital Markets and the Global Economy: A Vision of the CEOs of the International Audit Networks.
