The last decades have seen an impressive reshaping of capitalism. The reshaping of financial systems through deregulation created an impressive mobility of capital, the growth of institutional investors led to the rise of a new paradigm of governance, and information technology has transformed both transactions in capital markets as well as how investments are monitored. The reshaping of capitalism has also seen the rise of new ideas about Shareholder value as a conception has celebrated triumphs in both academic literature and corporate governance practice.
Yet we have a poor understanding of the role of management accounting systems in this new capitalism. Much is known from the corporate finance and financial economics literature on the value that financial markets place on information. Fair and equal disclosure of information has become a guiding principle in most market places.
Yet there are question that must be answered on how the pressures of financial markets enter the organizations in which they exert influence. Ezzamel et al. (2007:2) say “with a few exceptions, a critical examination of shareholder value creation is largely absent from the literatures on the (re)structuring of work and the use of accounting measures”. The impetus for this article was the need that we saw to review the literature in the fields of management accounting and organization studies to see what had been learnt about the influence of financial markets on the design of management accounting systems.
The article is a literature review of four journals. We have conducted a systematic literature review in which we selected journals from two fields – the organizational and management accounting. We have not studied finance literature. The journals were Accounting organizations and society, Management Accounting Review, Organizations Studies, and Administrative Science Quarterly. We selected the time period 1994 – 2008.
The main conclusion is a pessimistic one – the phenomenon has only been scantily studied. Yet, as we will show, there are fragments of understanding that may help further studies forward. Management accounting systems form the very vertebrae of vertical control systems and the limited understanding of the impact of the transformation of corporate governance is not satisfactory. We therefore conclude with a number of recommendations for further research.