Abstract
Following the theoretical innovations of complementarity theory, management control studies have investigated interdependencies between different management control practices. In this paper, we compare the two dominant statistical specifications to test for the presence of an interdependency. We show theoretically how the power of the demand and the performance specification varies with the level of optimality in the sample and how those specifications are vulnerable to correlated omitted variable bias. Our simulation results reveal that the demand specification is more robust to variations in optimality and correlated omitted variables than the performance specification. We use these results to formulate recommendations for future research into management control interdependencies.
Stijn Masschelein
Senior Lecturer in Accounting and Finance - Fellow in Center of Data Business Analytics
I am a lecturer in accounting at the University of Western Australia. I am interested in the role of (management accounting) information in decision making and risk taking. My research investigate how verifiable and subjective information supports formal and informal contracts. My interest is easily piqued and as a result I am involved in a wide variety of projects such as field applications in target setting and cost of quality, lab experiments on negotiations, markets, and risk taking, survey research on integrity and quantitative field studies in the banking sector. I developed experience in a range of statistical methods such as meta-analysis, (Bayesian) multilevel models, and simulations.