perceptions of organizational practices related to MAS and HRA, and how differences in these perceptions were related to both financial and non-financial performance indicators. We discuss both sets of findings, beginning with our survey measures.
6.1. Survey measure results (H1a & H1b)
We found interesting differences in how each job role ‘group’ responded to our study constructs. Intuitively, both HR priorities and importance of HR were perceived more favourably by HR employees. However, we were surprised to see that accounting employees did not rate MAS items significantly higher than HR employees. Rather, HR employees rated diagnostic and interactive styles of use higher than accounting employees, and the difference in diagnostic style of use was significant. For this we offer the following explanations.
First, personality differences related to job role function may have influenced survey response patterns. The literature exploring personality differences across job roles suggests that HR employees may give higher survey ratings than accounting employees, for all measures. Two studies suggest that HR professionals score higher on openness, agreeableness, and optimism than accountants. Specifically, Lounsbury, Steel, Gibson, and Drost (2008) found that HR managers have significantly higher mean scores than their non-HR peers on all big-five personality traits except conscientiousness, and Levy et al. (2011) provided evidence that accountants scored significantly lower than their non-accountant peers in openness, agreeableness, and optimism (Levy et al., 2011). Further, Hibbing et al. (2019) explored correlations between personality differences and survey response patterns, examining how the big-five predicts extreme response style (ERS; gravitation toward the most extreme response options) and acquiescence response style (ARS; the tendency to approve of ideas). They found that openness and optimism are significantly and positively correlated with both ERS and ARS (Hibbing et al., 2019).
In sum, prior research investigating personality trait differences across job roles suggest that HR employees tend to respond more agreeably to survey items. On the other hand, a healthy level of scepticism comes with the accounting profession (Cooper & Robson, 2006), potentially resulting in less agreeable survey responses. It is worth noting that most job-role personality research has explored broad functions such as job characteristics (i.e., Judge, Bono, & Locke, 2000) with little focus on personalities across job roles. Research into the impact of personality on job roles is an avenue for future research.
Secondly, we note that HR employees in this study responded significantly higher to only one of the two MAS constructs. Although researchers have noted the potential overlap between these MAS dimensions (i.e., Bouwens & Abernethy, 2000), HR employees only reported practices related to style of use as significantly higher than accounting employees. Compared to accounting employees, it is possible that our HR employees perceived the diagnostic and interactive dimensions as necessary practices to encourage dialogue, innovation, and organizational learning (Agbejule, 2011; Gomez-Conde et al., 2019). Qualitative research (i.e., semi-structured interviews) may be helpful in contextualizing how HR employees interpret styles of use MAS.
A final explanation as to why HR participants in our study rated MAS items strongly may relate to cultural definitions. Organizational cultures have the capacity to strongly influence how resources are measured. Specifically, Steen and Welch (2011) discuss how the HRA literature has been dominated by discussion as to whether humans fit the traditional definition of ‘assets’, and how to measure and report them. The items within the HR measures explored in this study included various statements related to measuring and reporting HRA practices. Perceptions of managerial accounting practices are important, given that the way items are measured conveys organizational values and priorities (Boudreau, 1998), and differences found in our study could reflect organizational differences in how to report and measure assets across both accounting and HR cultures.
6.2. Regression results (H2 and H3)
In regression analysis, we explored how perceptions of organizational practices impact performance. In terms of accounting performance, diagnostic style of use increases ROA and negatively impacts sales growth. This result is consistent with a cost control perspective attributed to the diagnostic style: lower expenses lead to higher profit thereby increasing ROA without generating sales growth. Additionally, a focus on resource allocation is likely to increase ROA through reduction of assets: a denominator effect. Our results augments research by Ittner et al. (2003) who fail to find a significant association between MAS and accounting performance.
HR priorities had a negative effect on ROA but a positive effect on sales growth, while importance of measuring HR negatively predicted sales growth. The initially counterintuitive finding on HR priorities may be related to HR stakeholders emphasising and prioritizing different aspects of HR (Ramlall & Melton, 2019). That is, although HR professionals share a common interest in disseminating HR priorities throughout their respective organizations, they may differ as to which policies are prioritized.
Turning to non-financial performance measures, diagnostic MAS positively associates with five-year employee growth. One might hypothesize that a firm with diagnostic MAS would have a lower static level of human capital because of its focus on resource efficiency. However, employee growth is a change-based measure and firm expansion requires strategic focus on resource growth including human capital.
Secondly, firms with high-quality environmental management tend to have less integrated MAS, lower priority on HR, and place greater importance on HR measurement. None of the items listed in our HR importance measure (Toulson & Dewe, 2004) addressed environmental issues, yet despite this absence, our research supports a more recent societal trend toward green HR management and ESG measurement (Haddock-Millar, Sanyal, & Müller-Camen, 2016; Roscoe, Subramanian, Jabbour, & Chong, 2019).
Lastly, market-level results indicate that firms with high abnormal stock returns tend not to use diagnostic style of MAS, and have high priority on HR. This result reflects the market's orientation toward firm fundamentals (i.e., future value creation potential) which often diverges from the historical orientation of financial accounting measures. Accordingly, the market may place a premium on firms that focus on innovative strategy (i.e., more interactive and less diagnostic MAS) and pay attention to human capital as a significant source of value. This result is consistent with Ittner et al. (2003) who finds that reporting a diverse suite of accounting information leads to greater one-year stock returns.
In exploration of firms' information environment, we found that firms with interactive MAS styles were associated with sluggish market price discovery, while diagnostic accounting styles may have more timely price discovery. We found this result to be intuitive because the diagnostic style of use focuses attention, while interactive style of use widens the focus of attention (Agbejule, 2011; Gomez-Conde et al., 2019). In effect, interactive MAS style requires employee input and debate (i.e., widened attention), a timely endeavor that delays information transmission to capital markets and likely results in more nuanced information which takes time to digest.
