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The association between CEO work, management accounting information, and financial performance: evidence from Finnish top managers

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Abstract

The objective of this study is to analyze the association between CEO work, importance of management accounting information (MAI), and financial performance of the firm. The research model is based on nine hypotheses on the association of CEO work with traditional dimensions of managerial tasks (time span, process stage, and functional area), importance of MAI, and financial performance. We assume that CEO work is directly associated with the importance of MAI, but also indirectly mediated by traditional task dimensions. It is also assumed that CEO work is associated with financial performance directly, but also indirectly mediated by the importance of MAI. The research model was tested by the partial least squares method using survey data from 215 Finnish top managers (CEOs) from firms of different industry and size classes. CEO work was captured in Mintzberg’s (The nature of managerial work. New York: Harper & Row, 1973) classic ten work roles, measured by the importance of 20 tasks. The importance of MAI was reflected by the importance of both the scope and the perspective of MAI. Financial performance was measured by traditional financial ratios. The results generally show that the CEO work latent variable (“information-user CEO”, IUC) is strongly associated with the importance of MAI. It is also strongly associated with traditional dimensions of managerial tasks. However, these dimensions do not intermediate this association further to the importance of MAI. This importance has only a weak direct association with financial performance that is negatively associated with IUC work.

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Notes

  1. It is important that the indicators cover all relevant alternatives.

  2. The time span classes for tasks are: \(<\) 1 month; 1–12 months; 1–3 years; \(>\) 3 years.

  3. The functional areas for tasks are: Financial accounting; finance; management accounting; legal matters; human resource management; purchasing and supply management; marketing & PR; production management; research and development.

  4. For abbreviations of variables, see Table 5 in Appendix.

  5. Formative indicators are constructed to cover all relevant alternatives for a concept.

  6. However, low coefficients are expected in this modeling, since the set of independent variables is strongly limited due to the focus of the study.

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Authors and Affiliations

  1. Department of Accounting and Business Finance, University of Vaasa, POB 700, 65101, Vaasa, Finland

    Erkki K. Laitinen

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  1. Erkki K. Laitinen
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Correspondence to Erkki K. Laitinen.

Appendix

Appendix

See Table 5.

Table 5 Descriptive statistics of model variables (N=215)
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Laitinen, E.K. The association between CEO work, management accounting information, and financial performance: evidence from Finnish top managers. J Manag Control 25, 221–257 (2014). https://doi.org/10.1007/s00187-014-0197-3

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