The Multiple Roles of the Finance Organization: Determinants, Effectiveness, and the Moderating Influence of Information System Integration

56 Pages Posted: 7 Apr 2014

See all articles by Hsihui Chang

Hsihui Chang

Drexel University

Christopher D. Ittner

University of Pennsylvania - Accounting Department

Michael Paz

Cornell University - School of Hotel Administration

Date Written: April 1, 2014

Abstract

This study focuses on three broad Finance organization roles: reporting, compliance, and internal control/risk management (RCCR); performance management; and strategic partner. Using data from a global survey of 832 firms, we examine the determinants of the various roles’ importance and their relation with Finance effectiveness. While the effects of organizational change, market growth, international operations, firm size, decentralization, and industry on Finance responsibilities vary depending upon the role, we find little evidence of tradeoffs between the various roles. Instead, we find evidence of complementarities between roles, whereby greater emphasis on one role is associated with greater Finance effectiveness in the other roles. Additionally, we find that information system integration (ISI) not only has a positive direct impact on effectiveness in all three roles, but also interacts with the importance placed on RCCR and performance management roles to improve the Finance organization’s effectiveness at carrying out these responsibilities.

Keywords: Finance organizations, Compliance and control, Performance management, Strategic partner, Information system integration

Suggested Citation

Chang, Hsihui and Ittner, Christopher D. and Paz, Michael, The Multiple Roles of the Finance Organization: Determinants, Effectiveness, and the Moderating Influence of Information System Integration (April 1, 2014). Journal of Management Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2420801

Hsihui Chang

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Christopher D. Ittner (Contact Author)

University of Pennsylvania - Accounting Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-7786 (Phone)
215-573-2054 (Fax)

Michael Paz

Cornell University - School of Hotel Administration ( email )

435B Statler Hall
Ithaca, NY 14853-6902
United States

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