ing Accounting Research Handout[1]

8/4/2019 ing Accounting Research Handout[1]

1/19

07/08/20

THEORISING ACCOUNTING RESEARCH:

FOR EXAMPLE, HOW TO USE THE

PRACTICE TURN IN SOCIAL SCIENCETO CONDUCT CORPORATE GOVERNANCE

RESEARCH

Thomas Ahrens, United Arab Emirates University

Overview. A short introduction

and a long example

1. Theory in accounting research

2. Research objective & motivation

3. The practice turn

in the social sciences ...in management accounting with 4 major schools

Lessons for corporate governance

4. A practices of corporate governance andmanagement accounting research agenda

5. Conclusions


2/19

07/08/20

1 Theory in accounting research

Is there an accounting theory?

A theory is a set of general or abstractstatements.

Extensive borrowing from Economics & information economics

Psychology

Sociology

Institutional theory Organisational theory

Anthropology

Theories, research questions &

new insights

Theories provide focal points that order the data

They respond to research questions but alsosuggest research questions and concerns

Is it true? Is it NEW?

are both functions on the research questions andtheories that were used in the research

Theory is essential to all research because itexplains the novelty & significance of theresearch

But good theory is not found arbitrarily


3/19

07/08/20

Theory relevance

Theory needs to capture the phenomenon Gunin-Paracini & Gendron (CPA, 2010) on parallels

between auditors and scapegoats

McCracken, Salterio & Gibbins (AOS, 2008) on the auditor-client negotiation of financial reporting

Ahrens & Chapman (AOS, 2007) on the functioning ofperformance measurement systems

The relevance of some (economic) theories is takenfor granted but what matters really is the relevanceof a particular theory to specific data

Theories can be parsimonious or rich

Theories grow out of intellectual and other contexts(and spread and mutate)

2 Research Objective

Use the practice turn in management accountingresearch to generate suggestions for connectingthe study of control in the fields of managementaccounting and corporate governance


4/19

07/08/20

Motivation

Management accounting and corporate governance

are concerned with organisational control

There is some overlap between strategic control and

management accounting, and the strategic agenda

setting and policy making of corporate governance

The CMA scorecard for boards


5/19

07/08/20

CIMA


6/19

07/08/20

back to Motivation

Management accounting and corporate governance

are concerned with organisational control

There is some overlap between strategic control and

management accounting, and the strategic agenda

setting and policy making of corporate governance

The corporate governance literature has focused on

structural elements of control

By contrast, a substantial part of the managementaccounting literature has included process &

accounting in action how?

3 The practice turn in the

social sciences

Action to the fore, but recognise order

Overcome action versus structure Practices themselves contain what structures them

Practices become the key social fact to study

Diverse theorising, but Practices are minimally defined as arrays of activity

Practices are embodied and mindful

Practical understandings and skills are shared

Practices are mediated by material environments

Practices are not just local


7/19

07/08/20

The practice turn in management

accounting

Management accounting as self-orderingpractice

Accounting systems and systems of accountability

Governmentality

Actor Network Theory (ANT)

Situated Functionality

Accounting systems and systems

of accountability

Organisational consequences of the uses ofaccounting systems in hierachies

Vertical and lateral information flows andaccountabilities

Modifications of practice ongoing in practice

References to Giddens


8/19

07/08/20

Governmentality

Draws on Foucault

Capillaries of power & power through, not over

Disciplining of subjects to develop the mentalityto be governed (through accounting)

Emphasis on blueprints for governing

Actor Network Theory (ANT)

Extremely flat ontology devoid of structures

Actors are network effects, must leave traces

Deconstructive overtones


9/19

07/08/20

Situated functionality

Perceivedfunctionality ofmanagementaccounting,given certainobjectives

Some lessons for corporate

governance research

So far corporate governance has been mostlyabout incentives for individuals, but in practice Not about individuals but how actions make up

practices

Not about how individuals make decisions under the

influence of so-called institutional logics but howpractices are determined

Not about transplanting schemes and designs frompowerful centres to compliant peripheries but anactive reworking of what is suggested

Creating shared resources in practice for practice


10/19

07/08/20

4 A practices of corporate

governance and management

accounting research agenda

Suggest 3 fields of study

Risk management

Environmental management accounting (EMA)

Corporate responsibility & sustainability reporting

Discuss how one might study the relations

between management accounting and corporategovernance knowing what we know from thepractice turn in management accounting

Conceptual foci

Schatzkis 3 determinants of practice Intentions, Rules, Practical understandings

Meshing of different practices

Reworking of shared resources to develop thepractice (situated functionality)

Practical intelligibility

Meta-practice aspects (management controlsystems as structures of intentionality) but management themselves subject to corporate

governance


11/19

07/08/20

Fields x conceptual foci

Risk

management

EMA Corporate responsibility &

sustainability reporting

Intentions of the practice

Rules of the practice

Practical understandings

Meshing of different

practices

Reworking of shared

resources to develop the

practice (situated

functionality)

Practical intelligibility

Meta-practice aspects

(MCS as structures of

intentionality)

Four ideal types of risk

management (Mikes 2009)


12/19

07/08/20

Risk management

Intentions of the practice Document risk; cap risk; manage risk; trade

off risks and returns; reputation

Rules of the practice SOX; stock exchange rules; professional

rules and guidelines; COSO; rating rules;

financial regulation; Cadbury

Practical understandings How to calculate & present risk; influence

behaviour

Meshing of different practices Organisational division of labour; VBM;

risk silo management; economic capital;

credit rating

Reworking of shared resources

to develop the practice (situated

functionality)

Experiment with risk categories; learning

about the beast; risk reviews; reform

internal cap.alloc.

Practical intelligibility Impress rating agencies; quantitative

scepticism

Meta-practice aspects (MCS as

structures of intentionality)

Board strategy; compliance of

organisational units; limit growth

IFACs EMA definition

the management of environmental andeconomic performance through thedevelopment and implementation ofappropriate environment-related accountingsystems and practices. While this may include

reporting and auditing in some companies,environmental management accountingtypically involves life-cycle costing, full-costaccounting, benefits assessment, and strategicplanning for environmental management (IFAC,2005, p.19).


13/19

07/08/20

Fluoride emissions & limits

Fluoride flow, aluminum smelter


14/19

07/08/20

Statistical

representation

of roof vent

emissions

during the

anode change

shifts in

kgFt/tAl

(cassetteresults) (SUP

= supervision)

Evolution of the emission

results from the anode change

shift on the reference and the

trial sections


15/19

07/08/20

EMA

Intentions of the practice Environmental management through

accounting

Rules of the practice Environmental laws; accounting

guidelines; ISO; IPPC; BREF;

OSPAR; IAI

Practical understandings How to trace & measure loss of

fluoride

Meshing of different practices Technical measurement; financial

measurement; regulation; capital

budgeting; environmental reporting

Reworking of shared resources to

develop the practice (situated

functionality)

Invent technical devices; change

technical and operational procedures;

assign supervisors

Practical intelligibility Adjust production to pollute up to the

maximum allowed



Attention to detail in operating

procedures; pollution consciousness

BT, connected reporting


16/19

07/08/20


17/19

07/08/20

BT buyer questionnaires

Guard reputation proactively

Improvement planning

Information sharing with other buyer companies


18/19

07/08/20

Corporate responsibility &

sustainability reporting

Intentions of the practice Measure, report, and improve sustainability

of corporate activities

Rules of the practice ISO26000 on sustainability

Practical understandings How to find & present data; influence

behaviour

Meshing of different practices Customer acceptance; public reputation;

product strategies; risk management;

around supplier questionnaire

Reworking of shared resources to

develop the practice (situated

functionality)

Combine KPIs with financial values;

distribute KPIs through annual report

Practical intelligibility Appear as an attractive investment and

esteemed corporation



Supplier questionnaire; embed peoples

brand efforts

Risk management EMA Corporate responsibility

& sustainability reporting

Intentions of the practice Document risk; cap risk;

manage risk; trade off risks

and returns; reputation

Environmental

management through

accounting

Measure, report, and

improve sustainability of

corporate activities

Rules of the practice SOX; stock exchange

rules; professional rules

and guidelines; COSO;

rating rules; financial

regulation; Cadbury

Environmental laws;

accounting guidelines;

ISO; IPPC; BREF;

OSPAR; IAI

ISO26000 on sustainability

Practical understandings How to calculate & present

risk; influence behaviour

How to trace & measure

loss of fluoride

How to find & present

data; influence behaviour

Meshing of different

practices

Organisational division of

labour; VBM; risk silo

management; economic

capital; credit rating

Technical measurement;

financial measurement;

regulation; capital

budgeting; environmental

reporting

Customer acceptance;

public reputation; product

strategies; risk

management; around

supplier questionnaire

Reworking of shared

resources to develop the

practice (situated

functionality)

Experiment with risk

categories; learning about

the beast; risk reviews;

reform internal cap.alloc.

Invent technical devices;

change technical and

operational procedures;

assign supervisors

Combine KPIs with

financial values; distribute

KPIs through annual report

Practical intelligibility Impress rating agencies;

quantitative scepticism

Adjust production to

pollute up to the maximum

allowed

Appear as an attractive

investment and esteemed

corporation

Meta-practice aspects

(MCS as structures of

intentionality)

Board strategy; compliance

of organisational units;

limit growth

Attention to detail in

operating procedures;

pollution consciousness

Supplier questionnaire;

embed peoples brand

efforts


19/19

07/08/20

5 Conclusions

Practice turn offers new resources to study diverse formsof management accounting and control in corporategovernance Show strategic significance of management accounting

Without simply calling for more transparency throughmanagement accounting, risk management, etc

Weakly formed practices direct attention to theirmeshing with other practices

Need to learn more about how corporate governancepractitioners draw on shared resources and change them

in the process Homo/heterogeneity and flexibility of practices

Opportunities for shared learning in a field that exhibitscompliance and volition

Documents

ing Accounting Research Handout[1]