The role of accounting in managerial work

1
The role of accounting in managerial work

• Matthew Hall - London School of Economics and
  Political Science
• GMARS 2007

2
Outline

• Managerial practice
• Some roles of accounting
• Search for surprises/opportunities/problems
• Build expert schemas
• Decision making
• Explanation
• Common threads
• Information set
• Verbal communications
• Expertise
• Concluding comments

3
Managerial practice

• Variety of tasks and activities, fragmentation,
  interruptions, verbal communications, lots of
  information sources
• Identifying surprises/opportunities/problems and
  building knowledge vs. solving problems
• Managers as analytical and intuitive decision
  makers
• Explaining and legitimising actions

4
Surprises/opportunities/problems

• Direct attention, identify changes, find and
  define problems
• Scanning search through information without a
  particular problem to solve (e.g., Huber 1991)
• Accounting and scanning
• Illustrative findings - Simon et al. (1954),
  Simons, Van der Veeken/Wouters (2002),
  Ahrens/Chapman (2007)
• Simple, timely, specific, prompt for action

5
Building expert schemas

• Managers devote significant time to increasing
  knowledge and understanding of the business
• Expert schemas (Dane/Pratt 2007)
• Highly complex, domain-relevant knowledge
  structures
• Develop through experience and information
  gathering
• Help the search for surprises, intuitive decision
  processes
• Accounting and developing knowledge
• Illustative findings Simon et al. (1954),
  McKinnon/Bruns (1992), Simons

6
Decision making

• Analytical and intuitive decision making
  processes
• Dane/Pratt (2007), Sloman (1996)
• Accounting and decision making
• Answering machine - accounting as an input
• Learning machine - trade-offs, simulations
  Wouters/Verdaasdonk (2002), Ahrens/Chapman (2007)
• Limits to quantification
• Intuitive processes?
• Build up knowledge
• Interference

7
Explanation

• Managers frequently explain and legitimise
  actions/decisions
• Decisions need to be explained using information
• Having information signals competence as a
  decision maker (Feldman/March 1981)
• Accounting and explanation
• Available
• Historical record in a common language (Henri
  2006)
• Symbolic power (Power 2004, Feldman/March 1981)

8
Information set

• Variety of activities, variety of information,
  variety of purposes
• Accounting as only one part of managers
  information set
• Observation, informal reports, networks
• Corroboration
• Competition
• A relative perspective on accounting
• Strengths and limits e.g., aggregation
• Complimentarities?
• Uncertainty

9
Verbal communications

• Managerial work is primarily verbal
• Accounting and verbal communication
• Much accounting information is received and
  disseminated verbally (McKinnon/Bruns 1992)
• Accounting as a prompt
• Accounting as a common frame
• Tailoring accounting information
• Linking accounting to other knowledge and
  information
• Theory communication, information processing,
  linguistics, social psychology

10
Expertise

• Managers as experts in the organisational domain
• Accounting and the building of expertise
• Expertise and accounting
• Functional background, proficiency with numbers,
  managerial level and experience (Simon et al.
  1954, McKinnon/Bruns 1992, Sprinkle 2003,
  Dane/Pratt 2007)

11
Concluding comments

• Link accounting to developments in managerial
  work
• Verbal, surprises, expertise, intuition,
  explanation, emotion, small businesses,
  expectation handler..
• Investigating potential new/expanded roles for
  accounting and their interaction
• Methods
• Experimental
• Ethnographic