How do enterprises respond to a managerial accounting performance measure mandated by the state?

Publication Type:
Journal Article
Journal of Management Accounting Research, 2018, 30 (3), pp. 145 - 168
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© 2018, American Accounting Association. All rights reserved. We study the application of Economic Value Added (EVA®) by Chinese state-owned enterprises (SOEs) following a regulatory requirement to deploy the measure. Our theoretical framing engages conceptual elements of institutional work and public accountability research to consider why key actors vary in their responses to the mandated application of EVA®. Our data derive from 30 interviews with managers in three SOEs and their oversight body (the State-Owned Assets Supervision and Administration Commission of the State Council). We identify two relevant dimensions associated with managers: accounting centricity and institutional potential and report that they drive the authenticity of actors’ responses in the absence of enforcement of the mandated measure. When accounting centricity and institutional potential align to the dictates of the higher implementing body, accountability remains high, notwithstanding the absence of enforcement. When these two factors do not align, accountability fails even when politicization is high and formal accountability claims are high. Where the two factors are partially present, the accountability response is mixed. Our study contributes to a refinement of the perspective advanced by prior investigations of institutionally sanctioned rollouts of accounting systems highlighting, in particular, the role of human agency in explaining actor responses.
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