Does Consistency in Management Control Systems Design Choices Influence Firm Performance? An Empirical Analysis

Accounting and Business Research, 2014

Posted: 6 Mar 2014

See all articles by Maleen Gong

Maleen Gong

Independent

Aldónio Ferreira

Monash University - Department of Accounting

Date Written: March 4, 2014

Abstract

This study examines the impact on firm performance of theoretically-consistent relationships between three management control systems (MCS) design choices — delegation, performance measurement, and incentive compensation. Based upon the ‘three-legged stool’ model and agency theory, it hypothesises that theoretically-consistent MCS design choices are associated with enhanced firm performance. Using survey data from large Australian firms, the findings support the hypothesis, suggesting that an appropriate MCS design is a determinant of firm performance. The study contributes to the literature by moving beyond a focus on the antecedents of the three key MCS design choices to the consequence of alignment of those choices.

Keywords: Delegation; Incentive compensation; Performance measurement; MCS design; Survey

Suggested Citation

Gong, Maleen and Ferreira, Aldónio, Does Consistency in Management Control Systems Design Choices Influence Firm Performance? An Empirical Analysis (March 4, 2014). Accounting and Business Research, 2014, Available at SSRN: https://ssrn.com/abstract=2404659

Aldónio Ferreira

Monash University - Department of Accounting ( email )

​E1065, Menzies Building, Level 10
​20 Chancellors Walk
Clayton, Victoria 3800
Australia
+61 3 9905 24267 (Phone)
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