The dynamism of pre-decision controls in the appraisal of strategic investments

Jari Huikku; Jouko Karjalainen; Tomi Seppälä

doi:10.1016/j.bar.2018.04.002

The dynamism of pre-decision controls in the appraisal of strategic investments

Jari Huikku^*
, Jouko Karjalainen
, Tomi Seppälä

^*Tämän työn vastaava kirjoittaja

Tutkimustuotos: Lehtiartikkeli › Article › Scientific › vertaisarvioitu

14 Sitaatiot (Scopus)

Abstrakti

In this study we examine the dynamism of pre-decision controls in the appraisal of strategic investments, an area largely overlooked by the literature, even though it is of the utmost importance to understand the mechanisms companies use to ensure their optimal capital investments. More specifically, we investigate how changes in companies’ economic, strategic, and organisational conditions relate to an increased emphasis on pre-decision controls such as policies, procedures, and routines. The empirical data is based on 108 interviews from among the 150 largest Finnish manufacturing companies. The paper contributes to the scarce capital budgeting literature by extending the discussion of the adaptations of pre-decision controls to external and internal environmental changes. We add to the literature by showing that changes in management may play a decisive role in control adaptations. Furthermore, we provide strong support to maintain that increased financial pressure can be related to the tightened use of controls.

Alkuperäiskieli	Englanti
Sivut	516-538
Julkaisu	British Accounting Review
Vuosikerta	50
Numero	5
Varhainen verkossa julkaisun päivämäärä	1 tammik. 2018
DOI - pysyväislinkit	https://doi.org/10.1016/j.bar.2018.04.002
Tila	Julkaistu - 1 syysk. 2018
OKM-julkaisutyyppi	A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä

Rahoitus

We would like to thank Thomas Ahrens, David Bedford, Seppo Ikäheimo, Habib Mahama, Jari Melgin, Antti Miihkinen, Deryl Northcott, Mikko Sandelin, and Sally Widener for their constructive comments on earlier versions of this paper. We are also grateful for the helpful comments from Kari Jussila and Panu Routila on the questionnaire. In addition, we acknowledge comments from the participants of the Manufacturing Accounting Research Conference in Helsinki (2012), the 6th Annual New Zealand Management Accounting Conference in Palmerston North (2012), EAA's Annual congress in Valencia (2017), and the accounting seminars at AUT University (Auckland, 2012) and UAE University (Al Ain, 2018). Furthermore, we wish to express our thanks to the people interviewed. The financial support granted to the authors by the Jenny and Antti Wihuri Foundation is acknowledged with gratitude. Appendix A

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10.1016/j.bar.2018.04.002

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Link to publication in Scopus

Siteeraa tätä

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title = "The dynamism of pre-decision controls in the appraisal of strategic investments",

abstract = "In this study we examine the dynamism of pre-decision controls in the appraisal of strategic investments, an area largely overlooked by the literature, even though it is of the utmost importance to understand the mechanisms companies use to ensure their optimal capital investments. More specifically, we investigate how changes in companies{\textquoteright} economic, strategic, and organisational conditions relate to an increased emphasis on pre-decision controls such as policies, procedures, and routines. The empirical data is based on 108 interviews from among the 150 largest Finnish manufacturing companies. The paper contributes to the scarce capital budgeting literature by extending the discussion of the adaptations of pre-decision controls to external and internal environmental changes. We add to the literature by showing that changes in management may play a decisive role in control adaptations. Furthermore, we provide strong support to maintain that increased financial pressure can be related to the tightened use of controls.",

keywords = "Capital budgeting, Generalised linear model, Management accounting change, Pre-decision control, Strategic investment",

author = "Jari Huikku and Jouko Karjalainen and Tomi Sepp{\"a}l{\"a}",

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T1 - The dynamism of pre-decision controls in the appraisal of strategic investments

AU - Huikku, Jari

AU - Karjalainen, Jouko

AU - Seppälä, Tomi

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AB - In this study we examine the dynamism of pre-decision controls in the appraisal of strategic investments, an area largely overlooked by the literature, even though it is of the utmost importance to understand the mechanisms companies use to ensure their optimal capital investments. More specifically, we investigate how changes in companies’ economic, strategic, and organisational conditions relate to an increased emphasis on pre-decision controls such as policies, procedures, and routines. The empirical data is based on 108 interviews from among the 150 largest Finnish manufacturing companies. The paper contributes to the scarce capital budgeting literature by extending the discussion of the adaptations of pre-decision controls to external and internal environmental changes. We add to the literature by showing that changes in management may play a decisive role in control adaptations. Furthermore, we provide strong support to maintain that increased financial pressure can be related to the tightened use of controls.

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KW - Generalised linear model

KW - Management accounting change

KW - Pre-decision control

KW - Strategic investment

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DO - 10.1016/j.bar.2018.04.002

M3 - Article

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SP - 516

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The dynamism of pre-decision controls in the appraisal of strategic investments

Abstrakti

Rahoitus

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