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Jason Zezhong Xiao and colleagues explain the results of their research into the adoption of management accounting techniques by Chinese listed companies.
Since China was granted accession to the World Trade Organisation in 2001, its companies have interacted more and more with foreign businesses. To the extent that management accounting and control systems are a basis for competition, it is important for managers in both Chinese and foreign companies and governments to be aware of the state of management accounting in Chinese firms.
Several studies have investigated the developments in, and application of, management accounting in China up to 2000. Although these provided useful insights, there have been major changes in the nation's economy since then, and none of this research covered techniques such as the balanced scorecard and value-added performance measures.
Methods
We focused on 25 practices including: cost behaviour analysis; cost allocation; activity-based-costing/management; environmental accounting; standard costing; target costing; Kaizen costing; operating budgeting; capital budgeting; performance measurement; transfer pricing; responsibility accounting; performance evaluation; compensation systems; and value-chain analysis.
We asked firms to tell us the extent to which they applied each of the 25 practices (see table 1, page 35). We asked them to rate how extensively the practice is used on a scale ranging from one ("not at all") to five ("very extensively"). We also split most techniques into their component steps. Only those firms that extensively adopted all components of a technique were classified as adopters.
We distributed the questionnaire to all listed companies in seven regions: Guangdong, Fujian, Heilongjiang, Jiangsu, Shaanxi, Sichuan and Tianjin. We chose listed companies because they are both more autonomous and more motivated to adopt management techniques to improve their performance. We selected these regions because they are at differing levels of economic development. Helongjiang, Shaanxi and Sichuan have been identified by the government as being economically less advanced than regions in the south and east of the country, including Fujian, Guangdong, Jiangsu and Tianjin.
We sent questionnaires to the chief accountant or financial controller of each of the 337 listed companies via e-mail in all regions except Shaanxi, where we sent out hard copies. There were 225 usable replies. The more developed regions contributed 68 per cent of the responses. The average total assets...