IDEAS home Printed from https://ideas.repec.org/a/fan/macoma/vhtml10.3280-maco2023-002-s1010.html
   My bibliography  Save this article

On the role of cost-effectiveness in accounting

Author

Listed:
  • Paolo Candio

Abstract

Cost-effectiveness refers to the achievement of optimal allocation of limited re-sources and its ultimate purpose is to support rational decision-making. Cost-effectiveness principles govern financial reporting and managerial accounting frameworks, yet in practice these might not have been formally characterised and identified within the accounting literature due to semantic issues and norms. This article explores the nexus between cost-effectiveness and accounting by conduct-ing a scoping review of the published literature. Findings from this study suggest that use of the cost-effectiveness criterion has increased over time and been more frequently employed by authors affiliated to U.S. academic institutions. Cost-effectiveness principles have been invoked both in published financial and mana-gerial accounting research. However, only a handful of mostly empirical studies have quantified cost-effectiveness evidence and formally applied and discussed its analytical methods. This article highlights a research gap pertaining to the de-velopment of interdisciplinary frameworks and analytical methods able to formal-ly integrate the concept of cost-effectiveness and cost-benefit analyses into ac-counting research.

Suggested Citation

  • Paolo Candio, 2023. "On the role of cost-effectiveness in accounting," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(2 Suppl.), pages 215-225.
    • Handle: RePEc:fan:macoma:v:html10.3280/maco2023-002-s1010
    as

    Download full text from publisher

    File URL: http://www.francoangeli.it/riviste/Scheda_Rivista.aspx?IDArticolo=74062&Tipo=ArticoloPDF
    Download Restriction: Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stikeleather, Bryan R., 2016. "When do employers benefit from offering workers a financial reward for reporting internal misconduct?," Accounting, Organizations and Society, Elsevier, vol. 52(C), pages 1-14.
    2. Zhe Chen & F. Douglas Foster & David R. Gallagher & Adrian D. Lee & Steven Cahan, 2015. "A model of emulation funds," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 55(3), pages 717-748, September.
    3. Chenhall, Robert & Morris, Deigan, 1991. "The effect of cognitive style and sponsorship bias on the treatment of opportunity costs in resource allocation decisions," Accounting, Organizations and Society, Elsevier, vol. 16(1), pages 27-46.
    4. Dennis H. Caplan & Michael Kirschenheiter, 2000. "Outsourcing and Audit Risk for Internal Audit Services," Contemporary Accounting Research, John Wiley & Sons, vol. 17(3), pages 387-428, September.
    5. Meichi Huang & Chih-Chiang Wu, 2015. "Economic benefits and determinants of extreme dependences between REIT and stock returns," Review of Quantitative Finance and Accounting, Springer, vol. 44(2), pages 299-327, February.
    6. Barniv, Ran & Danvers, Kreag & Healy, Joanne, 2000. "The impact of medicare capital prospective payment regulation on hospital capital expenditures," Journal of Accounting and Public Policy, Elsevier, vol. 19(1), pages 9-40.
    7. Katherine Schipper, 2010. "How can we measure the costs and benefits of changes in financial reporting standards?," Accounting and Business Research, Taylor & Francis Journals, vol. 40(3), pages 309-327.
    8. Hemmer, Thomas, 1998. "Performance measurement systems, incentives, and the optimal allocation of responsibilities," Journal of Accounting and Economics, Elsevier, vol. 25(3), pages 321-347, June.
    9. Espahbodi, Reza & Hendrikson, Harvey, 1987. "A discussion of cost-benefit analysis methodology," Journal of Accounting and Public Policy, Elsevier, vol. 6(3), pages 219-228.
    10. Rachel Geoffroy & Heemin Lee, 2021. "The Role of Academic Research in SEC Rulemaking: Evidence from Business Roundtable v. SEC," Journal of Accounting Research, Wiley Blackwell, vol. 59(2), pages 375-435, May.
    11. Novia X. Chen & Peng‐Chia Chiu & Terry Shevlin, 2018. "Do Analysts Matter for Corporate Tax Planning? Evidence from a Natural Experiment," Contemporary Accounting Research, John Wiley & Sons, vol. 35(2), pages 794-829, June.
    12. Nikolaev, Valeri V., 2017. "Discussion of “Borrower private information covenants and loan contract monitoring”," Journal of Accounting and Economics, Elsevier, vol. 64(2), pages 340-345.
    13. Webb, R. Alan, 2002. "The impact of reputation and variance investigations on the creation of budget slack," Accounting, Organizations and Society, Elsevier, vol. 27(4-5), pages 361-378.
    14. Greg Trompeter & Arnold Wright, 2010. "The World Has Changed—Have Analytical Procedure Practices?," Contemporary Accounting Research, John Wiley & Sons, vol. 27(2), pages 350-350, June.
    15. Daniel Bens & Sterling Huang & Liang Tan & Wan Wongsunwai, 2020. "Contracting and Reporting Conservatism around a Change in Fiduciary Duties," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2472-2500, December.
    16. Florio, Massimo & Morretta, Valentina & Willak, Witold, 2018. "Cost-Benefit Analysis and European Union Cohesion Policy: Economic Versus Financial Returns in Investment Project Appraisal," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 9(1), pages 147-180, April.
    17. Frank Gigler & Chandra Kanodia & Haresh Sapra & Raghu Venugopalan, 2014. "How Frequent Financial Reporting Can Cause Managerial Short‐Termism: An Analysis of the Costs and Benefits of Increasing Reporting Frequency," Journal of Accounting Research, Wiley Blackwell, vol. 52(2), pages 357-387, May.
    18. Steven S. Crawford & Karen K. Nelson & Brian R. Rountree, 2021. "Mind the gap: CEO–employee pay ratios and shareholder say‐on‐pay votes," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 308-337, January.
    19. Briggs, Andrew & Sculpher, Mark & Claxton, Karl, 2006. "Decision Modelling for Health Economic Evaluation," OUP Catalogue, Oxford University Press, number 9780198526629.
    20. Greg Trompeter & Arnold Wright, 2010. "The World Has Changed—Have Analytical Procedure Practices?," Contemporary Accounting Research, John Wiley & Sons, vol. 27(2), pages 669-700, June.
    21. Ann Vanstraelen & Caren Schelleman, 2017. "Auditing private companies: what do we know?," Accounting and Business Research, Taylor & Francis Journals, vol. 47(5), pages 565-584, July.
    22. Jonathan H. Grenier & Bradley Pomeroy & Matthew T. Stern, 2015. "The Effects of Accounting Standard Precision, Auditor Task Expertise, and Judgment Frameworks on Audit Firm Litigation Exposure," Contemporary Accounting Research, John Wiley & Sons, vol. 32(1), pages 336-357, March.
    23. Mirvis, Philip H. & Macy, Barry A., 1976. "Accounting for the costs and benefits of human resource development programs: An interdisciplinary approach," Accounting, Organizations and Society, Elsevier, vol. 1(2-3), pages 179-193, June.
    24. Arianna Becciu & Costina Andreea Calota & Cristina Gonnella & Sarah Russo, 2022. "Human resources management, knowledge sharing and innovative behavior: Which nexus? A systematic literature review," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(3), pages 13-37.
    25. Eric A. Posner & E. Glen Weyl, 2014. "Benefit-Cost Paradigms in Financial Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 43(S2), pages 1-34.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anna Lucia Missaglia & Alberto Bubbio & Dario Gulino, 2024. "From cost control to cost management: How is the current state of the Italian context?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2024(1), pages 203-226.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruhnke, Klaus & Schmitz, Stefanie, 2019. "Review engagements – structure of audit firm methodology and its situational application in Germany," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 37(C).
    2. Jasmijn C. Bol & Cassandra Estep & Frank Moers & Mark E. Peecher, 2018. "The Role of Tacit Knowledge in Auditor Expertise and Human Capital Development," Journal of Accounting Research, Wiley Blackwell, vol. 56(4), pages 1205-1252, September.
    3. Phuong Thi Nguyen, 2023. "The application of analytical procedures in Big Four audit firms in Vietnam ," GATR Journals afr229, Global Academy of Training and Research (GATR) Enterprise.
    4. Christian Leuz, 2018. "Evidence-based policymaking: promise, challenges and opportunities for accounting and financial markets research," Accounting and Business Research, Taylor & Francis Journals, vol. 48(5), pages 582-608, July.
    5. Aghazadeh, Sanaz & Joe, Jennifer R., 2022. "Auditors' response to management confidence and misstatement risk," Accounting, Organizations and Society, Elsevier, vol. 101(C).
    6. Ashley A. Austin & Jacqueline S. Hammersley & Michael A. Ricci, 2020. "Improving Auditors' Consideration of Evidence Contradicting Management's Estimate Assumptions†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 696-716, June.
    7. Carolyn Mactavish & Susan McCracken & Regan N. Schmidt, 2018. "External Auditors' Judgment and Decision Making: An Audit Process Task Analysis," Accounting Perspectives, John Wiley & Sons, vol. 17(3), pages 387-426, September.
    8. Yoon Ju Kang & M. David Piercey & Andrew Trotman, 2020. "Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 297-321, March.
    9. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 525-622, May.
    10. Joseph A. Johnson & Patrick R. Martin & Bryan Stikeleather & Donald Young, 2022. "Investigating the Interactive Effects of Prosocial Actions, Construal, and Moral Identity on the Extent of Employee Reporting Dishonesty," Journal of Business Ethics, Springer, vol. 181(3), pages 721-743, December.
    11. Aghazadeh, Sanaz & Hoang, Kris, 2020. "How does audit firm emphasis on client relationship quality influence auditors’ inferences about and responses to potential persuasion in client communications?," Accounting, Organizations and Society, Elsevier, vol. 87(C).
    12. Huh, Bong Gu & Lee, Sunhwa & Kim, Wonsin, 2021. "The impact of the input level of information system audit on the audit quality: Korean evidence," International Journal of Accounting Information Systems, Elsevier, vol. 43(C).
    13. Downar, Benedikt & Ernstberger, Jürgen & Koch, Christopher, 2021. "Determinants and consequences of auditor dyad formation at the top level of audit teams," Accounting, Organizations and Society, Elsevier, vol. 89(C).
    14. Chiranjeev Sanyal & Don Husereau, 2020. "Systematic Review of Economic Evaluations of Services Provided by Community Pharmacists," Applied Health Economics and Health Policy, Springer, vol. 18(3), pages 375-392, June.
    15. Arantzazu Arrospide & Oliver Ibarrondo & Iván Castilla & Igor Larrañaga & Javier Mar, 2022. "Development and Validation of a Discrete Event Simulation Model to Evaluate the Cardiovascular Impact of Population Policies for Obesity," Medical Decision Making, , vol. 42(2), pages 241-254, February.
    16. Mark Oppe & Daniela Ortín-Sulbarán & Carlos Vila Silván & Anabel Estévez-Carrillo & Juan M. Ramos-Goñi, 2021. "Cost-effectiveness of adding Sativex® spray to spasticity care in Belgium: using bootstrapping instead of Monte Carlo simulation for probabilistic sensitivity analyses," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(5), pages 711-721, July.
    17. Kaitlyn Hastings & Clara Marquina & Jedidiah Morton & Dina Abushanab & Danielle Berkovic & Stella Talic & Ella Zomer & Danny Liew & Zanfina Ademi, 2022. "Projected New-Onset Cardiovascular Disease by Socioeconomic Group in Australia," PharmacoEconomics, Springer, vol. 40(4), pages 449-460, April.
    18. Andrea Marcellusi & Raffaella Viti & Loreta A. Kondili & Stefano Rosato & Stefano Vella & Francesco Saverio Mennini, 2019. "Economic Consequences of Investing in Anti-HCV Antiviral Treatment from the Italian NHS Perspective: A Real-World-Based Analysis of PITER Data," PharmacoEconomics, Springer, vol. 37(2), pages 255-266, February.
    19. Risha Gidwani & Louise B. Russell, 2020. "Estimating Transition Probabilities from Published Evidence: A Tutorial for Decision Modelers," PharmacoEconomics, Springer, vol. 38(11), pages 1153-1164, November.
    20. Round, Jeff, 2012. "Is a QALY still a QALY at the end of life?," Journal of Health Economics, Elsevier, vol. 31(3), pages 521-527.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fan:macoma:v:html10.3280/maco2023-002-s1010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefania Rosato (email available below). General contact details of provider: http://www.francoangeli.it/riviste/sommario.aspx?IDRivista=166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.