The influence of managerial competence on the relationship between cost accounting systems and financial performance: A quantitative study of social welfare organizations

Ashfaque  Ahmed; Shaili  Vadera; Samina  Bashir; Ashraf  Imam; Asma  Khatoon; Asif  Baig; Imran Ahmad  Khan

doi:10.33094/ijaefa.v17i2.1162

Authors

Ashfaque Ahmed Department of Accountancy, College of Administrative and Financial Sciences, Saudi Electronic University, Riyadh, Saudi Arabia. https://orcid.org/0000-0003-4977-9628
Shaili Vadera Department of Accounting and Finance, College of Business Administration, Prince Mohammad Bin Fahd University, Al Khobar, Saudi Arabia. https://orcid.org/0000-0002-9115-7649
Samina Bashir College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia. https://orcid.org/0000-0003-3857-3376
Ashraf Imam Al-Fayha College, Jubail, Saudi Arabia. https://orcid.org/0000-0002-9023-0998
Asma Khatoon Department of Accounting, College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia. https://orcid.org/0000-0003-2704-7776
Asif Baig Jubail Industrial College, Jubail Industrial City, Jubail, Saudi Arabia. https://orcid.org/0000-0002-5779-6164
Imran Ahmad Khan Pacelile Corporate Consulting, India. https://orcid.org/0000-0003-2383-0608

DOI:

https://doi.org/10.33094/ijaefa.v17i2.1162

Keywords:

Costing system, Financial performance, Management ability, Social welfare organization, Upper echelons theory.

Abstract

This study was conducted to examine how the abilities of business managers affect the relationship between cost accounting systems and financial performance. The data has been obtained from social welfare organizations. Multiple regression analysis without an interaction term was first conducted as the base model followed by hierarchical multiple regression analysis to verify the increase in explanatory power by adding an interaction term. All independent variables, adjustment variables and control variables except dummy variables were centralized to facilitate the interpretation of the interaction term. A regression diagnosis was conducted after the exclusion of outliers. The statistical analysis environment R was used for the analysis. The findings of the study suggest that among the four functionalities of cost accounting systems, detailed cost ascertainment and reporting frequency may affect organizational performance through interactions with the abilities of business managers. This study may be viewed as a first step in examining the effects of the interaction between the functionality of cost accounting systems and the abilities of business managers on the financial performance of organizations.