Professional accountants are well positioned to play a significant role in organizational performance as creators, enablers, preservers, and reporters of value. In our just-published literature review, The Relationship between Accountancy Expertise and Business Performance, and its companion Key Findings, we discuss the results of more than 90 academic research papers on the relationship between accounting expertise and business performance. The results of our review can help inform professional accountancy bodies, practitioners, and policy makers by providing a broader understanding of how accountancy contributes to business performance and operates in various contexts.

Our research, which was facilitated by the University of Dayton in accordance with an agreement to increase IFAC’s research capacity, split the literature into two groups—small- and medium-sized entities (SMEs) and large entities, as important differences exist between studies covering SMEs and those addressing large entities in terms of how business performance and accountancy expertise and advice are operationalized and how the research is executed.

Small- and Medium-sized Entities

SME owner-managers view performance as a combination of financial—profitability and growth—and non-financial—lifestyle, relationships, and image—expectations. Not all SMEs view growth as their overarching objective; for some, longevity or survival is their measure of success. Therefore, in many instances, growth is not an appropriate measure of SME performance. Survival may be the most useful measure for SME performance, especially for start-up companies.

According to the research, accounting expertise—that is, the accounting or business advice accessed by SMEs—is associated with better performance, for example, increased survival rates, growth, profitability, improved decision making and learning, and improved relationships. Research furthermore implies that advice in non-traditional areas, such as human resources, environmental issues, and business and management support, has a high potential to impact SME performance.

Large Entities

For large entities, accounting expertise from both internal and external accountants is most often used for development and deployment of accounting techniques. Thus, there is a complex, rich literature dealing separately with each accounting technique. However, the impact of these techniques on performance is directly investigated only in a few cases and most studies yield inconclusive results about the effects of various accounting techniques on performance. Nevertheless, studies that support a positive association between receiving accounting expertise and corporate performance prevail. But the impact of accessing accounting advice provided by accountants, or the accounting and finance function, is related to accountants’ role in organizations, such as bookkeeper, counselor, business partner, etc. Some studies also suggest that “transformed” roles for professional accountants that include a business counseling or partner roles are associated with superior organizational performance.

Gaps in the Literature & Recommendations for Future Research

Our literature review also revealed some gaps. First, studies in less investigated jurisdictions as well as comparative studies are needed to observe similarities and differences on a regional or international level. Our research found that studies specifically examining the impact of accountancy expertise on performance are limited to a few countries, with a small number of exceptions.

Second, in-depth studies following various theoretical approaches, such as institutional or psychological, are needed to complement comparative, large-sample studies. The use of accountancy expertise utilization in organizations is complex and needs to be understood within the context of the specific country/region and sector (e.g., economic pressures and competition), organizational factors (e.g., strategy and objectives) and personal attributes (e.g., of the owner/manager or the relationship between accountants and other organizational functions).

Third, more research is needed to identify and explore on cause-and-effect relationships. Existing research points to a relationship between accountancy expertise and business performance without clearly identifying cause-and-effect relationships.

We also uncovered an important limitation in the existing literature. There is a lack of comparability between the findings for SMEs and large entities owing to the diversity of approaches to investigating accountancy expertise and business performance. Further research and studies are needed globally in order to make more meaningful assessments.

Conclusion

Generally, the relationship addressed in existing literature is that of association as, in most cases, empirical research designs do not allow testing for causality. Moreover, development and performance lead to an increased use of accountancy expertise, and accountancy expertise leads to superior performance and development.

Catalin Albu

Professor of Accounting, Bucharest University of Economic Studies, Romania

Catalin Albu is a Professor of Accounting at Bucharest University of Economic Studies in Romania, where he teaches since 2000 courses including financial accounting, cost and management accounting, or internal auditing, at undergraduate and graduate levels, in Romanian, English and French. Catalin’s main research interests are the changes of management accounting systems in, and the transfer of international reporting practices to, emerging markets. Catalin is KPMG Professor since 2011, and 2011 Senior Fulbright Grantee at the University of Dayton, OH, where he taught managerial accounting.

Nadia Albu

Professor of Accounting, Bucharest University of Economic Studies, Romania

Nadia Albu is a Professor of Accounting at Bucharest University of Economic Studies, Romania, where she teaches since 2000 courses including international accounting, financial accounting, performance management systems, or cost accounting, at undergraduate and graduate levels, in Romanian, English and French. Her main research interests are the segment information practices under IFRS, and the changes of management accounting systems in emerging markets. Nadia is 2014 Senior Fulbright Grantee at the University of Dayton, OH, where she conducted research on segment information, and Deloitte IAAER Scholar between 2013 and 2015.