TY - JOUR

T1 - Differences in the sophistication of Value-based Management

T2 - The role of top executives

AU - Burkert, Michael

AU - Lueg, Rainer

PY - 2013/3

Y1 - 2013/3

N2 - This paper responds to recent calls for studying the diffusion of management practices beyond classifying companies as adopters and non-adopters (Ansari et al., 2010; Lounsbury, 2008). In particular, we examine how characteristics of CEOs and CFOs as well as perceived environmental uncertainty (PEU) of the top management team (TMT) affect the sophistication of Value-based Management (VBM) for which we develop a multi-dimensional construct.We base our analyses on a unique dataset that comprises archival data, interviews and survey data from top executives of German HDAX companies (58% response rate). The results of our Partial Least Squares (PLS) model (R2=55%) support most of our hypotheses and provide interesting findings.We find that the CFOs in our sample have substantially more influence on VBM-sophistication than CEOs. In particular, we document that cognitive styles (educational background in business) of CFOs have a substantial impact on VBM-sophistication. Moreover, short-tenured CFOs are associated with high VBM-sophistication. As expected, the related negative effect of long tenure on VBM sophistication is practically offset if the CFO has an educational background in business.Another relevant finding is that high perceived environmental uncertainty of the top management team is significantly associated with lower VBM-sophistication. The results of our control variables moreover reveal that systematic risk ('beta') leads to higher VBM sophistication.

AB - This paper responds to recent calls for studying the diffusion of management practices beyond classifying companies as adopters and non-adopters (Ansari et al., 2010; Lounsbury, 2008). In particular, we examine how characteristics of CEOs and CFOs as well as perceived environmental uncertainty (PEU) of the top management team (TMT) affect the sophistication of Value-based Management (VBM) for which we develop a multi-dimensional construct.We base our analyses on a unique dataset that comprises archival data, interviews and survey data from top executives of German HDAX companies (58% response rate). The results of our Partial Least Squares (PLS) model (R2=55%) support most of our hypotheses and provide interesting findings.We find that the CFOs in our sample have substantially more influence on VBM-sophistication than CEOs. In particular, we document that cognitive styles (educational background in business) of CFOs have a substantial impact on VBM-sophistication. Moreover, short-tenured CFOs are associated with high VBM-sophistication. As expected, the related negative effect of long tenure on VBM sophistication is practically offset if the CFO has an educational background in business.Another relevant finding is that high perceived environmental uncertainty of the top management team is significantly associated with lower VBM-sophistication. The results of our control variables moreover reveal that systematic risk ('beta') leads to higher VBM sophistication.

KW - CEO

KW - CFO

KW - Diffusion theory

KW - Education

KW - Perceived environmental uncertainty (PEU)

KW - Tenure

KW - Top management team (TMT)

KW - Value-based Management (VBM)

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=84875373983&partnerID=8YFLogxK

U2 - 10.1016/j.mar.2012.10.001

DO - 10.1016/j.mar.2012.10.001

M3 - Journal articles

AN - SCOPUS:84875373983

VL - 24

SP - 3

EP - 22

JO - Management Accounting Research

JF - Management Accounting Research

SN - 1044-5005

IS - 1

ER -