Updating Accounting Systems: Longitudinal Evidence from the Health Care Sector

Management Science, Forthcoming

43 Pages Posted: 18 Jun 2019 Last revised: 15 Sep 2019

See all articles by Eva Labro

Eva Labro

Kenan-Flagler Business School University of North Carolina

Lorien Stice-Lawrence

University of Southern California - Marshall School of Business

Date Written: June 10, 2019

Abstract

This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year time-span in a large sample of U.S. hospitals. We provide evidence that hospitals update their AS in response to three types of pressures: economic pressures, such as increases in the quality of accounting information driven by vendor rollouts of improved AS; coercive pressures imposed by regulators mandating certain practices, such as internal control practices imposed by Sarbanes-Oxley Section 404; and mimetic pressures for hospitals to conform their AS to those of their peers, such as local county and prominent “celebrity” peers. We find that only economically driven updates lead to economic benefits in the form of lower operating expenses and higher revenues. In contrast, we find some evidence that AS updates prompted by coercive regulatory pressures actually impose economic costs in the form of higher operating expenses.

Keywords: Management Accounting, Accounting System Updating, Health Care Costs, Sarbanes-Oxley Act Section 404, Economic Determinants, Mimicry, Coercion

JEL Classification: M41, I1, L86

Suggested Citation

Labro, Eva and Stice-Lawrence, Lorien, Updating Accounting Systems: Longitudinal Evidence from the Health Care Sector (June 10, 2019). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3402041

Eva Labro

Kenan-Flagler Business School University of North Carolina ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
(919) 962-5747 (Phone)

Lorien Stice-Lawrence (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

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