Management accounting systems, enterprise risk management and organizational performance in financial institutions

Rasid, Siti Zaleha Abdul; Isa, Che Ruhana; Ismail, Wan Khairuzzaman Wan

doi:10.1108/ara-03-2013-0022

Cited by 36 publications

(43 citation statements)

References 27 publications

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“…For decision-making, planning and organization control system, ERM is essential within an organization. In addition, ERM practices are not only vital for financial performance but also improve the non-financial performance of firms (Rasid et al 2014). The top management team is responsible for organizational strategy, cost reduction and long-term planning, and from this perspective, they need to be aware of ERM practices, which had a direct influence on the organizational strategic decision-making process, costs, and activities (Meidell and Kaarbøe 2017).…”

Section: Erm and Competitive Advantagementioning

confidence: 99%

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

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In the current turbulent market, firms spend lots of tangible and intangible resources to gain competitive advantage and superior performance. Prior studies have discussed several determinants of competitive advantage and performance, particularly in developed economies, whereas small-and medium-sized enterprises (SMEs) in emerging economies have received minor attention. This study examines the mediating role of competitive advantage between enterprise risk management practices and SME performance and the moderating role of financial literacy between enterprise risk management practices and competitive advantage. A structured questionnaire is used to collect data from 304 SMEs operating in the emerging market of Pakistan. The hypotheses of the proposed study are tested through Structural Equation Modeling (SEM) in Analysis of a Moment Structures (AMOS). The results indicate that enterprise risk management practices significantly influence competitive advantage and SME performance. Competitive advantage partially mediates the relationship between enterprise risk management practices and SME performance. Additionally, financial literacy significantly moderates the relationship between enterprise risk management practices and competitive advantage. Firms are advised to implement formal enterprise risk management practices to gain competitive advantage and superior performance. Top managers need to have enough financial education that they will be able to perform risk management practices in an efficient way to gain a competitive position in the market. Implications for practices have been discussed in detail.

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Section: Erm and Competitive Advantagementioning

confidence: 99%

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Yang

Ishtiaq

Anwar

2018

JRFM

167

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“…This paper seeks to serve future accounting science by clarifying the feed-forward structure of the COLC model as it shifts from reactive feedback information to proactive feed-forward information and from piecemeal and partially optimum functions to holistic and social functions, corresponding with the holistic perspective of risk management (see Drori, 2006;Power, 2007;Mikes, 2011;Grote, 2014;Rasid, et al, 2014). It also examines the contribution of contemporary management accounting to the control of uncertainty as well as governance in enterprise risk management.…”

Section: Resultsmentioning

confidence: 99%

“…Enterprise risk management and accounting control systems use different approaches to realizing the common goal of maximizing business value (Holmquist, 2012). As Rasid, Isa, and Ismail (2014) point out, "In fact, risk management and management accounting are integral to strategic planning and performance assessment" (Grote, globally finance-oriented and competitive economies have had to control uncertainty more sensibly and commit more deeply to risk management than before. In the following subsections, we further explore the state of accounting control systems that enterprises and researchers have devised to address changes and diversity in uncertainty.…”

Section: Basic Framework Of the Accounting Control Systemmentioning

confidence: 99%

Comprehensive Opportunity and Lost Opportunity Control Model and Enterprise Risk Management

Nishimura¹

2015

IJBM

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The purpose of this paper is to build a comprehensive opportunity and lost opportunity control model through which contemporary management accounting can act in alignment with enterprise risk management, as well as to examine its managerial and socio-economic functions in relation to risk management in the context of uncertainty in a global finance-oriented society. For this purpose, the paper demonstrates the structure and characteristics of this model specifically in contrast with traditional and other control models that have been previously addressed for controlling the changes and diversity of business environments. We can recognize from this demonstration that the accounting control system based on opportunity and lost opportunity control model has shifted its fundamental focus from feedback systems, profitability, and managerial control to feed-forward, value creation, and enterprise governance. The paper also refers to the socio-economic function that the model fulfills in the disclosure and transparency of the risk management process. These results lead to the conclusion that contemporary management accounting expands its short-term efficiency and company-centered effectiveness into long-term efficiency and social effectiveness.

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“…Management accounting makes it possible to prepare broad information, including both financial and non-financial information, on past and future performance. Rasid, Isa, and Ismail (2014) also mention that "besides information that is broad in scope, management accounting information that is timely, integrated and aggregated is essential for risk management" (p. 140). At the same time, as Kim and Collier (2013) point out, management accounting is more strongly inclined to consider risk information than cost.…”

Section: Literature On the Interrelation Between Risk Management And mentioning

confidence: 99%

Foreign Exchange Risk and Profit Improvement in the Comprehensive Profit Opportunity and Lost Opportunity Control Model

Nishimura¹

2016

IJBM

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The aim of this paper is to examine the influence of foreign exchange risks on manufacturing activities (<em>monozukuri</em> in Japanese) and the function of derivatives as a countermeasure against such risk from the viewpoint of management accounting. From this perspective, we examine the Comprehensive Profit Opportunity and Lost Opportunity Control (COLC) model, discussed previously in this journal, and further its practical development and application. To this end, this paper first clarifies the actual situations of major Japanese manufacturing companies in terms of foreign exchange fluctuation earnings and derivative instruments (including hedge accounting). Then, after investigation of the prior research on the interrelation between risk management and management accounting, we theoretically analyze the relations between risks, derivatives, and hedge accounting from the synthetic viewpoint of profit opportunity, risk, and opportunity cost. As a result, this analysis can play an important role in outlining the landscape in which business strategy and enterprise risk management align, both proactively and reflectively, with contemporary management accounting.

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Management accounting systems, enterprise risk management and organizational performance in financial institutions

Cited by 36 publications

References 27 publications

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

Comprehensive Opportunity and Lost Opportunity Control Model and Enterprise Risk Management

Foreign Exchange Risk and Profit Improvement in the Comprehensive Profit Opportunity and Lost Opportunity Control Model

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