The effect of some contingent variables on Universities' Accounting Systems and Performance ...

405 Pages·2012·2.06 MB·English

UNIVERSITY OF SOUTHAMPTON

FACULTY OF BUSINESS AND LAW

SCHOOL OF MANAGEMENT

The effect of some contingent variables on
Universities’ Accounting Systems and
Performance Management

by

Abbas Alimoradi Sharifabadi

Thesis for the degree of Doctor of Philosophy

May 2012
In the Name of Allah

To my dear wife Fatemeh and my sweetheart sons,
Hossein and Hassan
UNIVERSITY OF SOUTHAMPTON

ABSTRACT

FACULTY OF BUSINESS AND LAW
SCHOOL OF MANAGEMENT

Doctor of Philosophy

The effect of some contingent variables on Universities’
Accounting System and Performance Management

by Abbas Alimoradi Sharifabadi

Many external factors have affected Governmental Universities of Iran in the past six
years. Decentralization in terms of delegation of authority, budget constraint and
competitive position for better quality and higher performance in teaching and
research are the main factors. According to Contingency Theory in accounting, there
is no identical management accounting system or control system to fulfil the needs of
all organizations in every situation (Chenhall, 2003, Otley, 1980).This study
investigates the effects of the aforementioned variables on the accounting systems and
performance management of Iran’s state Higher Education Institutions. Based on the
Contingency Theory literature a theoretical model has been developed and empirically
tested. Data were collected from the Governmental Universities in Iran during the
latter part of 2009 through a postal questionnaire. All 126 Governmental Universities
in Iran were sent the questionnaire and responses were obtained from Financial,
Education, and Research Departments in each university. Fully completed
questionnaires were collected from 246 Departments (65.1 per cent response rate) and
Structural Equation Modelling (SEM) was used as the main data analysing technique
to provide an understanding of the proposed model used in Iranian universities for
Accounting Systems and Performance Management Systems. The results confirm
most of the related propositions of Contingency Theory, however the priority of
budgeting practices, particularly participative budgeting, over other accounting
aspects is supported. In addition, importance of employing comprehensive
performance measures as well as use of accounting information in PM was revealed,
although amendment and improvement in their reward system is not at expected level.
I
II
List of Contents
Abstract I
List of Contents III
List of Tables XI
List of Figures XVII
Declaration of Authorship XIX
Acknowledgment XXI
Abbreviations XXIII

Chapter One – Introduction 1
1-1. Preamble 1
1-2. Motivations for Undertaking this Study 2
1-3. Research Objectives 3
1-4. Research Questions 4
1-5. Research Methodology 4
1-6. Perceived Benefits of the Study 5
1-7. Structure of the Thesis 6
1-7-1. Context and Background of the Study 6
1-7-2. Literature Review 7
1-7-3. Methodology and Hypotheses 7
1-7-4. Bases and Behaviours of SEM 8
1-7-5. Descriptive Data Analysis 8
1-7-6. SEM Data Analysis and Hypotheses Testing 8
1-7-7. Discussion and Conclusion 9
1-8. Summary and Conclusion 9

Chapter Two – Context and Background of the Study 11
2-1. Introduction 11
2-2. General Characteristics 11
2-2-1. Geography and Climate 11
2-2-2. History 12
III
2-2-3. Government and Politics 13
2-2-4. Religion and Culture 14
2-2-5. Economy 14
2-3. Higher Education and Universities 15
2-3-1. History of Higher Education 15
2-3-1-1. Ancient Higher Education 15
2-3-1-2. Modern Higher Education 16
2-3-2. Classification of Universities 17
2-3-2-1. Governmental Universities 17
2-3-2-2. Non-governmental Universities 18
2-3-3. Entrance into the Universities 18
2-4. New Situations of Governmental Universities 19
2-4-1. Decentralization and more Autonomy 20
2-4-2. Changes in Accounting Rules 20
2-4-3. Competitive Position 21
2-4-4. Financial Pressure 22
2-5. Summary and Conclusion 23

Chapter Three – Literature Review 25
3-1. Introduction 25
3-2. Part One: Contingency-based Accounting Studies 25
3-2-1. Origin, Definition, and Covering area 25
3-2-2. Fit Approaches in Contingency Studies 27
3-2-3. Theoretical Review and Criticism of Contingency-based Studies 31
3-2-4. Review of Empirical Contingency-based Studies 36
3-2-4-1. Contingent Variables and Accounting Systems 36
3-2-4-2. Contingent Variables, Accounting System, and Performance 40
3-2-4-3. Negative Effects of Accounting Systems 44
3-2-5. Use of SEM in Contingency-based Studies 48
3-2-6. Contingency Studies in Public Sector 50
3-2-6-1. Common Contingency Accounting Studies 51
3-2-6-2. Specific Contingency Model of Accounting 54
3-3. Part Two: Related Studies in Performance Management 55
IV
3-3-1. Performance Management Studies in Private Sector 56
3-3-1-1. Traditional Performance Management 57
3-3-1-2. New forms of Performance Management 57
3-3-1-3. BSC a Holistic form of Performance Management 58
3-3-2. Performance Management Studies in Public Sector 60
3-3-2-1. BSC in Public Sector 61
3-3-2-2. Other Bases for Performance Measurement 63
3-3-2-3. Implementation of Performance Management 64
3-3-2-4. Accounting and Performance Management 66
3-3-3. Performance Management Studies in Higher Education 68
3-3-3-1. External Stakeholders and Performance 68
3-3-3-2. Autonomy and Decentralization 69
3-3-3-3. Performance Indicators 70
3-3-3-4. Use of TQM and BSC 71
3-3-4. Relevant Studies about Iran’s Higher Education 73
3-4. Research Gaps and Concluding Remarks 76

Chapter Four – Methodology and Hypotheses 81
4-1. Introduction 81
4-2. Research Philosophy 82
4-3. Underlying Theory 84
4-3-1. Alternative Theories 85
4-3-2. Evaluation of Contingency Theory 85
4-4. Research Approach and Strategy 87
4-5. Hypotheses Development 88
4-5-1. Accounting System and External Factors 88
4-5-1-1. Decentralization 89
4-5-1-2. Competitive Position 90
4-5-1-3. Financial Pressure 91
4-5-1-4. External Factors and Improved Accounting System 92
4-5-1-5. External Factors and Budget Emphasis 94
4-5-1-6. External Factors and Participative Budgeting 95
4-5-1-7. Participative Budgeting and Performance 97
V
4-5-1-8. Improved Accounting System and Performance 98
4-5-1-9. Budget Emphasis and Performance 100
4-5-2. Performance Management and External Factors 103
4-5-2-1. Comprehensive Performance Measures 103
4-5-2-2. Improvement in Reward System 105
4-5-2-3. Use of Accounting Information in PM 108
4-5-2-4. Performance Management and Performance 109
4-5-3. Differences in Departmental Level 112
4-6. Data Collection Method and Population 115
4-7. Questionnaire Design and Variable Measurement 117
4-7-1. Competitive Position 119
4-7-2. Financial Pressure 120
4-7-3. Decentralization 120
4-7-4. Improved Accounting System 121
4-7-5. More Budget Emphasis 122
4-7-6. Participative Budgeting 122
4-7-7. Satisfaction with Budgets 123
4-7-8. Competitive Advantage 124
4-7-9. Comprehensive Performance Measures 124
4-7-10. Improvement in Reward System 125
4-7-11. Use of Accounting Information in PM 125
4-7-12. Departmental Performance 126
4-7-12-1. Education Performance 127
4-7-12-2. Research Performance 128
4-7-12-3. Financial Performance 128
4-8. Data Analysing Techniques 129
4-9. Summary and Conclusion 131

Chapter Five – Bases and Behaviours of SEM 133
5-1. Introduction 133
5-2. Multivariate Data Analysing Techniques 133
5-2-1. Correlation Analysis 134
5-2-2. Regression Analysis 135
VI
5-2-3. Moderation and Regression Analysis 136
5-2-4. Mediation and Regression Analysis 137
5-2-5. Analysis of Variances (ANOVA) 138
5-2-6. Cluster Analysis 139
5-2-7. Factor Analysis 140
5-3. Structural Equation Modelling 142
5-3-1. Steps of SEM 143
5-3-2. Model Specification 144
5-3-3. Model Identification 145
5-3-4. Traits of the Data Needed for SEM 146
5-3-5. Measurement and Structural Models 148
5-3-6. Confirmatory Factor Analysis 148
5-3-7. Model Fit, Concepts and Criteria 150
5-3-8. Estimation in SEM 153
5-3-9. Common-used Software in SEM 154
5-3-10. Priorities of SEM over Other Techniques 156
5-3-11. Appropriateness of SEM to be Employed in this Study 157
5-4. Summary and Conclusion 158

Chapter Six –Descriptive Data Analysis 161
6-1. Introduction 161
6-2. Overall Information about Collected Data 161
6-2-1. Response Rate and Distribution of Responses 161
6-2-2. Some Statistics regarding the Respondents 163
6-2-3. Extra Information regarding the Issue 164
6-3. Descriptive Statistics of Variables 167
6-3-1. Competitive Position (Factor 1) 167
6-3-2. Financial Pressure (Factor 2) 169
6-3-3. Decentralization (Factor 3) 170
6-3-4. Participative Budgeting (Factor 4) 171
6-3-5. Improved Accounting System (Factor 5) 172
6-3-6. More Budget Emphasis (Factor 6) 174
6-3-7. Satisfaction with Budgets (Factor 7) 175
VII
6-3-8. Competitive Advantage (Factor 8) 176
6-3-9. Improvement in Reward System (Factor 9) 177
6-3-10. Comprehensive Performance Measures (Factor 10) 179
6-3-11. Use of Accounting Information in PM (Factor 11) 181
6-3-12. Universities’ Departmental Performance (Factor 12) 182
6-4. Correlation between Variables 184
6-5. Exploratory Factor Analysis 185
6-6. Summary and Conclusion 191

Chapter Seven –SEM Data Analysis and Hypotheses Testing 193
7-1. Introduction 193
7-2. Design and Test of SEM Models 193
7-3. Measurement Models 194
7-3-1. Competitive Position and Financial Pressure (Factors 1 & 2) 195
7-3-2. Decentralization (Factor 3) 198
7-3-3. Participative Budgeting (Factor 4) 201
7-3-4. Improved Accounting System (Factor 5) 202
7-3-5. More Budget Emphasis & Satisfaction with Budgets (Factors 6 & 7) 205
7-3-6. Competitive Advantage (Factor 8) 206
7-3-7. Reward System (Factor 9) 207
7-3-8. Comprehensive Performance Measures (Factor 10) 209
7-3-9. Use of Accounting Information in PM (Factor 11) 210
7-3-10. Universities’ Departmental Performance (Factor 12) 211
7-4. Structural Models 213
7-4-1. Accounting System Model 215
7-4-1-1. Assessment of Normality and Bootstrapping 219
7-4-1-2. The Effect of “Size” on the Model 221
7-4-2. Performance Management Model 223
7-4-2-1. Assessment of Normality and Bootstrapping 226
7-4-3. Differentials among Departments 227
7-4-3-1. Differences in Accounting System Model 228
7-4-3-2. Differences in Performance management Model 231
7-5. Results of Hypotheses Testing 232
VIII