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Cost Accounting in Anglophone Subsidiaries

Empirical Evidence from Germany


Moritz Schröder

Cost accounting in Anglophone countries is in general less detailed than German cost accounting. Such cross-national differences imply a tension for Anglophone multinationals operating in Germany. These firms have to balance the group-wide application of their home-country traditions and the approval of diverging local cost accounting systems. By the means of a dyadic research design, this study finds empirical evidence for Anglophone cost accounting traditions to prevail in subsidiaries of Anglophone multinationals in Germany. However, the top management teams in these subsidiaries tend to work around such coercive pressures. The findings also suggest that the subsidiaries prefer to deviate from their parent companies’ traditions to ensure the usefulness of information for their cost accounting systems.
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Appendix 4 summarises the linear correlations between the dependent and independent variables as well as the controls.1017 For the Anglophone subsidiaries, there are three peculiar findings.

First, the relational context and all three coercive institutional influences correlate rather weakly, yet highly significantly (1 % level) in a negative manner (r = -0.29; -0.26; - 0.38). Thus, the more extensive a parent company is involved in its subsidiary, the less unfavourable is the relational context. Either a subsidiary perceives the relationship with its parent to be more unfavourable if the parent engages very little into its management accounting or a parent is less likely to impose a cost accounting practice if there is a rather tense relationship with its subsidiary. These associations could be due to an implicit prevalence of the suggested moderation. If there is a rather unfavourable situation, a subsidiary may report little influence on its cost accounting system simply because they have previously opposed it. On the other hand, the result might be due to the fact that the longer the time of affiliation, the less unfavourable the relational context (r = -0.19, p = 5 %). Thus, the researched companies appear to learn to get along with their parent over time. If the suggested moderation between the relational context and the coercive institutional pressures cannot be identified in section 6.1.2, this correlation has to be reconsidered. The finding, however, underlines that the relational context and coercive institutional influences are indeed intertwined and as such merit in-depth...

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