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Lookup NU author(s): Dr Josie McLaren,
Professor Tony Appleyard
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When Economic Value Added (EVA™) was first promoted by Stern Stewart and Company, it was hailed as an innovation in management accounting. The suggestion was that this measure could be used as the basis for the management control system within the firm, covering planning, control, investment decision making and remuneration determination. This study adopts a longitudinal perspective to examine the experience of three large New Zealand companies, in which EVA was implemented in the 1990s and used as the management control system for 10-15 years. Evidence is gathered from a questionnaire conducted in 1999, interviews conducted in 2001 and 2011 and supporting documentary evidence. It covers the entire ‘life cycle’ of EVA, from initial implementation, through evolution to the eventual decline. Contingency theory is extended to a longitudinal perspective to analyse the variables that were important at each stage of the life cycle. The study provides four main contributions to the literature on contingency theory. First, the longer-term perspective is itself a contribution. The extension to a longer-term focus facilitated the second contribution, the identification of the relevant variables that were influential at each stage of the life cycle. A third contribution is the proposed new contingency variable, termed learning and adapting. For the companies, learning and adapting led to evolution in the system. Finally, the model of technique decline is itself a contribution.
Author(s): McLaren J, Appleyard A, Mitchell F
Publication type: Conference Proceedings (inc. Abstract)
Publication status: Published
Conference Name: 49th BAFA (British Accounting and Finance Association) Annual Conference
Year of Conference: 2013