The Interfirm Contracting Value of Management Accounting Information

We examine how firms' management accounting information influences interfirm contract design. We theorize that comprehensive accounting information enables firms to design more complete contracts with suppliers, as indicated by increased issue inclusiveness and clause specificity. Survey data o...

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Bibliographic Details
Published in:Journal of management accounting research 2019-06, Vol.31 (2), p.59-74
Main Authors: Dekker, Henri C., Kawai, Takaharu, Sakaguchi, Junya
Format: Article
Language:English
Subjects:
Contracts
Financial reporting
Management accounting
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Summary:We examine how firms' management accounting information influences interfirm contract design. We theorize that comprehensive accounting information enables firms to design more complete contracts with suppliers, as indicated by increased issue inclusiveness and clause specificity. Survey data of Japanese manufacturing firms about the management of supplier relationships support the expectation that comprehensive management accounting information enables the development of more inclusive and specific contracts with suppliers. These contracts are also less subject to additional informal agreements between exchange partners. These results are consistent with the idea that better accounting information enables more complete contracting.
ISSN:1049-2127
1558-8033
DOI:10.2308/jmar-52058