Performance Management Accounting and Profitability: Evidence from Small and Medium Enterprises
(Pages 475-483)Asma Khatoon1, Adeeb Alhebry2, Hina Khan3, Ebrahim Mohammed Al-Matari4*, Asif Baig5 and Imran Ahmad Khan6*
1Department of Accounting, College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia.
2Accounting Program, Applied College, King Khalid University, Kingdom of Saudi Arabia and Ibb University, Yemen.
3Assistant Professor, College of Business Administration, Imam Abdulrahman Bin Faisal University, Dammam, Saudi Arabia
4Department of Accounting, College of Business, Jouf University, Kingdom of Saudi Arabia and Faculty of Commerce and Economics, Amran University, Amran, Yemen.
5Assistant Professor, Jubail Industrial College, Jubail Industrial City, Jubail, Saudi Arabia.
6Consultant, Pacelile Corporate Consulting, India.
DOI: https://doi.org/10.55365/1923.x2023.21.48
Abstract:
This study analyzed the relationship between the level of profit margin and profit margin control with the level of performance management accounting practices in SMEs. We conducted a quasi-experiment using the propensity score of Rosenbaum and Rubin (1983). Then, ordinal logistic regression analysis was used to calculate the propensity score. We tested the hypothesis regarding the relative level of performance management accounting practices and the level of profitability of SMEs (the profit improvement effect hypothesis). We also tested whether the variance of profit margins is smaller in the group of SMEs with relatively high levels of performance management accounting practice compared to the group of SMEs with relatively low levels of practice (profit control effect hypothesis). The results of the analysis were not statistically significant, as there was no tendency to suggest that SMEs' implementation of performance management accounting is associated with the achievement of higher profit margins. We also could not confirm a statistically significant difference in the tendency of SMEs to control their profit margins by engaging in performance management accounting. The results of the additional stratified analysis suggest that the relationship between the degree of implementation of performance management accounting and profitability varies depending on the size of the organization.
Keywords:
Management accounting practice, Profit margin control effects, Propensity score matching.
JEL Classification:
M40, M41.
How to Cite:
Asma Khatoon, Adeeb Alhebry, Hina Khan, Ebrahim Mohammed Al-Matari, Asif Baig and Imran Ahmad Khan. Performance Management Accounting and Profitability: Evidence from Small and Medium Enterprises. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a48/
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