Small companies: failure and success

Article Abstract:

Keasey and Watson's model for small business failure indicates that non-financial information about a company is more useful in predicting failure than financial information. The British small business failure rate is about 10%. Some of the reasons for failure include: domination of the business by an autocrat, inadequacy of the accounting system, juggled financial statements, and 'gearing'. One of the chief reasons for small business failure is late or nonpayment of bills. This is not due to criminality or gross negligence but simple mismanagement, inaccurate forecasting and forecasting, and ineffective cash flow techniques. In Scottish firms, marketing is slighted in favor of production-manufacturing . When microcomputers are used, it is for marketing record-keeping, not decision-making.

Analysis, Management, Small business, Scotland, Business success, Business failures

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Developments in management accounting research

Article Abstract:

David Otley of the University of Lancaster has recently written about developments in management accounting in The British Accounting Review. Researchers are moving toward field-based research - getting involved in actual problems, in real situations. This should provide opportunities for more practical applications of research. Some areas covered in recent research are contingency theory - categorization of accounting information systems into different types and explaining variables, agency theory - the process by which an owner hires an agent to carry out tasks in an uncertain environment. Also human information processing - an attempt to create models of human judgement and management control systems - which may provide a beginning for study of management accounting and its practice.

Research, Accounting, Practice, Accountants, Managerial accounting

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