Benchmarking and Accounting - a field study

Abstract

Many studies in the field of empirical accounting research reveal that although companies should follow the approach of telling their specific investment story (Stanton and Stanton, 2002) to the outside investors corporate disclosures tend to assimilate and converge to their peers group disclosures and form clusters or bundles (Beerbaum, 2015, Wagenhofer, 2008, Cadbury, 1999, Markarian et al., 2007) following the theory of path dependency (Bebchuk and Roe, 1999). To discern the wood from the trees and grasp the nettle of complexity in the increasing overloaded annual report, corporate annual reports have inevitable been playing the adding value role due to technology: application of sophisticated clustering software using content analysis, processing of structured data by Extensible Business Reporting Language (XBRL) and using artificial intelligence to help to navigate the reader and identify decision useful information. Little research is however done on the understanding if company themselves pro-actively support convergence by applying management accounting technique of Benchmarking and Best-practice analysis. The paper applies a mixed-method approach to improve understanding. In an exploratory setting first interviews demonstrate in fact that Benchmarking and Best-practice analysis are widely-used tool among Financial Management and are not restricted to Management Accounting. This development also underpins the convergence between Management and Financial Accounting. In a followed quantitative study the hypothesis can be confirmed that through the application of Benchmarking disclosures among peers tend to convergence and standardize over time, whereas the degree of convergence increase the longer the Accounting Standard is applicable. The study specifically focus on Related Party disclosures and recommend to extend the scope for future research.