Management Accounting Techniques and Firm Performance of Major Construction Companies in Nigeria
DOI:
https://doi.org/10.53819/81018102t2016Abstract
To remain competitive, construction companies must continually improve and one way is by use of the right MATs. The adoption of MATs can help organizations to improve their financial performance continually and consequently overall national economic development. This study investigated influence of management accounting techniques on the firm performance of construction companies in Nigeria. The objectives were, to assess firm performance level of construction companies in Nigeria, to examine the influence of activity-based costing (ABC), strategic analysis, and budgeting practices on firm performance. The study used quantitative research design while the target population was all the 35 major construction firms. The sample size was 13 companies. The research used questionnaire to gather data from 170 managers. The study used descriptive statistics and inferential analysis. The study found that ABC, strategic analysis, and budgeting practices had positive relationship with firm performance. The study concludes that the companies employed ABC to improve firm performance. The study concludes that most companies used both internal and external analysis to improve performance. The study concludes that many companies failed to involve all departments during budgeting. The study recommends that companies should increase resources to complete projects within stipulated time frame. The study recommends that the policies should be enhanced by conducting researches and regular evaluation to improve business environment for the realization of improved performance of the construction companies.
Key words: Management Accounting Techniques, Activity-Based Costing, Firm Performance, Strategic Analysis, and Budgeting Practices
References
Abba, M., Yahaya, L., & Suleiman, N. (2018). Explored and critique of contingency theory for management accounting research. Journal of Accounting and Financial Management ISSN, 4(5).
Abdel-Kader, M., & Luther, R. (2016). Management accounting practices and the performance of the British food and drinks industry. British Food Journal, 2(4), 336-357. https://doi.org/10.1108/00070700610661321
Abdullahi, R. (2015). The impact of management accounting practices on firm performance: A UK-based empirical analysis. British Accounting Review, 40(1), 2-27. https://doi.org/10.1016/j.bar.2007.11.003
Achimugu, A., & Ocheni, S. I. (2015). Application of management accounting techniques in the public sector of Nigerian economy. Journal of Good Governance and Sustainable Development in Africa (JGGSDA), 2(4), 234-240
Adler, R., Everett, A. M., & Waldron, M. (2015). Role of management accounting techniques on the performance of public institutions in Chile. International Journal of Business and Social Science, 9(2), 49-58.
Ajibolade, S. O. (2017). Management accounting techniques and company performance in Nigerian construction companies: A contingency theory perspective. British Journal of Arts and Social Sciences, 14(2), 228-244.
Akenbor, C., & Ibanichuka, E. (2012). Creative management accounting practices in Nigerian banks. An International Multidisciplinary Journal, 6(3), 23-34. https://doi.org/10.4314/afrrev.v6i3.2
Aksoylu, S., & Aykan, E., (2013). Effects of management accounting techniques on perceived performance of businesses industries in Nigeria. Journal of US-China Public Administration,10(10), 1004-1017
Alintah-Abel, U. V., Iheama, N. B., & Ugochukwu, S. C. (2020). Effect of Company Strategies on Organisational Performance in Nigerian Construction Industry. Journal of Engineering Research and Reports, 25-33. https://doi.org/10.9734/jerr/2020/v14i417132
Al-Mawali, H., Sharif, A. A., Rumman, G. A., Kerzan, F., & Liu, G. (2018). Environmental strategy, environmental management accounting and organizational performance: evidence from the United Arab Emirates market.
Journal of Environmental Accounting and Management, 6(2), 109-118. https://doi.org/10.5890/JEAM.2018.06.002
Amoako, G. K. (2013). Accounting practices of SMEs and contribution on performance. A case study of Kumasi Metropolis in Ghana. International Journal of Business and Management, 8(24), 121-127. https://doi.org/10.5539/ijbm.v8n24p73
Anand, A., Sahay, B., & Subhashish, S. (2014). Cost management practices and performance of Indian corporations. ASCI Journal of Management, 3(3), 1-12.
Ashfaq, K., Younas, S., Usman, M., & Hanif, Z. (2014). Traditional vs contemporary management accounting practices and their role on performance: Evidence from Pakistani financial sector. International Journal of Academic Research in Accounting, Finance and Management Science, 4(4), 104-125. https://doi.org/10.6007/IJARAFMS/v4-i4/1285
Atkinson, A., Kaplan, R., Matsumara, E., & Young, M. (2012). Management accounting: Information for decision-making and strategy execution. Management Accounting Research, 12(4), 111-114
Ayodele, S. A., & Falokun, G. O. (2013). Assessing effect of management accounting techniques on SMEs performance. The Nigerian Economy-Structure and Pattern of Development, 26-153
Ballada, W. (2012). Basic management accounting made easy. The competencies and problems facing managers. International Scientific Research Journal, 1(4), 131-166.
Bardhan, P. (1989). The new institutional economics and development theory: A brief critical assessment. World Development, 17(9), 1389-1395. https://doi.org/10.1016/0305-750X(89)90080-6
Burns, J., & Scapens, R. W. (2000). Conceptualizing management accounting change: an institutional framework. Management accounting research, 11(1), 3-25. https://doi.org/10.1006/mare.1999.0119
Creswell, J. W. (2013). Research design: Qualitative, quantitative, and mixed methods approach. Sage publications, New York.
Cuypers, I. R., Hennart, J. F., Silverman, B. S., & Ertug, G. (2021). Transaction cost theory: Past progress, current challenges, and suggestions for the future. Academy of Management Annals, 15(1), 111-150. https://doi.org/10.5465/annals.2019.0051
Disatnik, D., & Sivan, L. (2016). The multicollinearity illusion in moderated regression analysis. Marketing Letters, 27(2), 403-408. https://doi.org/10.1007/s11002-014-9339-5
Dugdale, D., & Jones, T. C. (2015). Impact of management accounting techniques on performance of service firms in the UK. Accounting, Business and Financial History, 13(3), 305-338. https://doi.org/10.1080/09585200310001606608
Dul, J., & Hak, T. (2015). Case study methodology in business research (1st Ed.). Oxford: Butterworth-Heinemann.
Falope, F. J., Offor, N. T., & Ofurum, D. I. (2019). Environmental cost disclosure and corporate performance of quoted construction firms in Nigeria. Int. J. Adv. Acad. Res, 5(6), 17-31.
Georgiev, G. (2014). The relationship of budgetary participation and reliance on accounting performance measures with individual-level consequent variables: A Meta-Analysis. European Accounting Review, 18(2), 203-239. https://doi.org/10.1080/09638180802652371
Gichaaga, P. M. (2014). Effects of management accounting practices on financial performance of manufacturing companies in Kenya. Research Journal of Finance and Accounting, 3(5), 45-66
Ibarrondo-Dávila, M. P., López-Alonso, M., & Rubio-Gámez, M. C. (2015). Managerial accounting for safety management. The case of a Spanish construction company. SafetyScience, 7(9), 116-125. https://doi.org/10.1016/j.ssci.2015.05.014
Isa, C. R., & Thye, N. K. (2016). Advanced management accounting techniques: an exploratory study on Malaysian manufacturing firms. Proceeding of the International Business and Information, 3(12), 118-119.
Islam, J., & Hui, H. (2012). A review of literature on contingency theory in managerial accounting. African Journal of Business Management, 6(15), 5159-5164. https://doi.org/10.5897/AJBM11.2764
Karanja, J., Mwangi, E., & Nyaanga, P. (2012). Adoption of modern management accounting techniques in enhancing performance among SMEs in Kenya. Research Journal of Finance and Accounting, 3(2), 58-69.
Kasravi, A., & Ghasemi, M. (2017). The effect of management accounting, financial performance and organizational performance in Tafresh University. Journal of Internet Banking and Commerce, 22(3), 1-10.
Klein, A. G., Gerhard, C., Büchner, R. D., Diestel, S., & Schermelleh-Engel, K. (2016). The detection of heteroscedasticity in regression models for psychological data. Psychological Test and Assessment Modeling, 58(4), 567.
Mazumder, R. (2017). Empirical assessment of management accounting techniques and performance private manufacturing firms in Bangladesh. European Accounting Review, 11(4), 787-794.
Mbawuni,J., & Anertey, A. (2014). Exploring management accounting techniques and their influence in the performance of emerging telecommunication market in Nigeria. Accounting and Finance Research, 3(4),71-85. https://doi.org/10.5430/afr.v3n4p71
Melek, E. (2017). Impact of management accounting techniques: impact of MATs on the performance of top 500 firms in Turkey. Journal of Modern Accounting & Auditing, 8(1), 39-40.
Mohammed, M., & Ali, H. (2013). Effectiveness of cash budgeting in public institutions: A case study of Telkom Kenya. The Accounting Review, 42(4), 701-712.
Musso, F., & Francioni, B. (2012). The influence of decision-maker characteristics on the international strategic decision-making process: An SME perspective. Procedia-Social and Behavioral Sciences, 58, 279-288. https://doi.org/10.1016/j.sbspro.2012.09.1002
Myers, J. L., Well, A. D., & Lorch Jr, R. F. (2013). Research design and statistical analysis. Routledge: USA. https://doi.org/10.4324/9780203726631
Ogunde, A., Owolabi, D., Olusola, K. O., Tunji-Olayeni, P., Amusan, L., Joshua, O., & Akhigbe, A. O. (2016). Factors affecting the competencies and project delivery of small-sized indigenous construction firms in Lagos state. Covenant Journal of Research in the Built Environment, 4(1). 456-461
Oladimeji, O., & Aina, O. O. (2018). Financial performance of locally owned construction firms in southwestern Nigeria. Journal of Financial Management of Property and Construction, 3(11), 212-219. https://doi.org/10.1108/JFMPC-01-2017-0003
Otley, D. T. (2018). The contingency theory of management accounting: achievement and prognosis. In Readings in accounting for management control (pp. 83-106). Springer, Boston, MA. https://doi.org/10.1007/978-1-4899-7138-8_5
Pallant, J. (2005). SPSS survival manual: a step-by-step guide to data analysis using SPSS for windows. Australia: Australian copyright.
Rickard, S. J., & Kono, D. Y. (2013). Effect of management accounting techniques on performance of construction firms in Belgium (case of Hasselt limited). Review of International Organizations, 9(3), 333-352. https://doi.org/10.1007/s11558-013-9177-x
Saaydah, M. I., & Khatatneh, W. R. (2014). The level of adoption of some recent management accounting tools and the perceived effect on the performance of Jordan manufacturing companies. Global Review of Accounting and Finance, 5(1), 52-75. https://doi.org/10.21102/graf.2014.03.51.04
Salawu, R., Oyesola, A., & Tajudeen, J. (2015). Activity based costing adoption among agricultural companies in Nigeria. Journal of Modern Accounting & Auditing, 8(1), 39-40.
Schmidt, A. F., & Finan, C. (2018). Linear regression and the normality assumption. Journal of Clinical Epidemiology, 98(12), 146-151. https://doi.org/10.1016/j.jclinepi.2017.12.006
Scott, W. R. (2005). Institutional theory: Contributing to a theoretical research program. Great minds in management. The Process of Theory Development, 37(2), 460-484.
Tiruneh, G. G., & Fayek, A. R. (2020). Competency and performance measures for organizations in the construction industry. Canadian Journal of Civil Engineering, 2(6), 234-239
Tunji – Olayeni, P. F., Lawal, P. O. & Amusan, L. M. (2012). Developing infrastructure in Nigeria: Why is the cost so high? Mediterranean Journal of Social Sciences, 2(3), 262- 270
Tunji-Olayeni, P., Olusoji M. T., Fagbenle, O.I., Omuh, I. O., & Opeyemi J. (2016). Evaluating construction project performance: A case of construction SMEs in Lagos, Nigeria. Journal of Innovation and Business Best Practices, 10(5), 171-201. https://doi.org/10.5171/2016.482398
Van Der Stede, T. (2014). The effect of management accounting techniques on performance of Fluor Construction Company in Netherlands. Journal of Integrative Business and Economics Research, 2(2), 616-626
Wairegi, B. W. (2011). Management accounting techniques and performance of Small and Micro Enterprises in Kenya. Journal of Language, Technology and Entrepreneurship in Africa, 3(1), 79-98. https://doi.org/10.4314/jolte.v3i1.66591
Yamane, T. (1967). Statistics: An Introductory Analysis. 2nd ed. New York: Harper and Row.