The Mutual Relationship Between Corporate Governance and Management Accounting: Which Occurs First?
Quang Linh Huynh
DOI : 10.3844/ajassp.2015.403.410
American Journal of Applied Sciences
Volume 12, Issue 6
This research focuses on the complicated relationship between Corporate Governance and Management Accounting. On the one hand, good corporate governance structure is a driving force of adopting management accounting techniques in business; on the other hand it is enhanced by the information derived from management accounting techniques. The mutual relationship between corporate governance structure and management accounting has been discussed and examined, but it is investigated separately. The current research investigates this mutual relationship for the publicly listed firms in Vietnam. By applying the advanced models of directed graph searches and directed acyclic graphs, this study examines the mutual relationship in a joint model. The findings confirm that good corporate governance structures are first the causality of adopting management accounting techniques in business. Then, these management accounting techniques will help to result in better corporate governance structures. The results provide researchers as well as managers with a better understanding of the complicated relationship between corporate governance structure and management accounting. This will help the managers build effective management accounting techniques, which match with their corporate governance structures, so that their firms can attain the possible best performance.
© 2015 Quang Linh Huynh. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.