Hanna Silvola

Impact of enterprise resource planning systems on management control systems and firm performance

In this study, we extend existing research on enterprise resource planning systems by exploring the effects of enterprise system adoption on subsequent non-financial and financial performance of a firm. Specifically, we investigate the role of formal and informal management control systems as mechanisms which mediate the effect of enterprise resource planning systems adoption on firm performance. Our empirical analyses are based on survey data drawn from 70 Finnish business units. Overall, our findings demonstrate that formal types of management control systems act as intervening variables mediating the positive lagged effect between enterprise systems adoption and non-financial performance. Informal types of management control systems, however, do not show similar mediating effects. We also predict and find a significant relationship between non-financial and financial firm performance. These results are important because the evidence on the joint roles of enterprise systems and management control system on improving the firm performance is very limited in prior literature. Our results show that the use of enterprise systems results in improved firm performance in the long run, and that more formal than informal types of management controls help firms achieve future performance goals.

Lagging Effects of the Use of Activity‐Based Costing on the Financial Performance of Small Firms

This paper contributes to the earlier small business literature by investigating the lagging effects of the use of activity‐based costing (ABC) on small firms performance. Moreover, we examine if the small firms past financial performance drives the adoption of ABC and explore whether the extent of ABC use leads, in turn, to improvements in firms financial performance in the immediate future. In sum, the survey results indicate that small firms with adequate financial resources as well as firms experiencing declining growth tend to use ABC and such use facilitates their subsequent growth and profitability. Small firms seem to benefit from using ABC.

Low-Intensity R&D and Capital Budgeting Decisions in it Firms

This paper investigates the extent to which formal capital budgeting methods are used in small high-tech firms. We define high-tech firms by their R&D intensity. In addition, we define software industry as a special type of R&D-intensive firm. We focus on the methods that are used by the small high-tech firms in evaluating the profitability of investment projects, estimating the cost of capital and making decisions related to the capital structure. Our results based on two surveys of Finnish firms indicate that the high-tech firms use similar capital budgeting methods and estimate their cost of capital in a similar way to other small-sized firms in other industries. Moreover, high-tech firms seek external financing and co-owners.

Can investors rely on the quality of earnings figures published by listed and non-listed Russian firms?

This paper investigates earnings quality of both listed and non-listed Russian firms and explores whether foreign ownership affects the quality of earnings published by non-listed Russian firms. Russia, the largest European transitional economy, is an increasingly attractive market for foreign investors. Our empirical results show that Russian firms listed on a stock exchange report earnings of relatively good quality. We do not find support for the hypothesis that non-listed Russian firms co-owned by foreign investors report earnings of better quality than do exclusively Russian-owned non-listed firms. However, we find that non-listed Russian firms with foreign ownership report earnings with more timely recognition of economic gains than exclusively Russian-owned non-listed firms do. Our results are robust for different specifications of the earnings quality model.

Capital budgeting methods, management control systems and the R&D intensity of the firm

This paper investigates the effect of the Research and Development (R&D) intensity of the firm on the use of management control systems, capital budgeting methods and the methods to determine the cost of capital. Based on earlier literature, we develop several hypotheses that we test empirically, using survey data of the 101 Finnish firms operating in the capital area. The results indicate that the use of management control systems such as control and bonus systems, budgeting and strategic alliances increases with the degree of the R&D intensity of the firm. The results also indicate that high-R&D-intensity firms use formal capital budgeting methods within large and strategic projects. Finally, our results show that the use of sophisticated capital budgeting methods such as Net Present Value (NPV) and Internal Rate of Return (IRR) methods increases with the R&D intensity of the firm. Our results remain materially the same after controlling for several firm characteristics.

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Finland

ABSTRACT We investigate how Finland has applied Directive 2013/34/EU of the European Parliament and of the Council to the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. In addition to the implementation process and general implications of the Finnish Accounting Act, we emphasize its implications and interplay with IFRS. We conclude that the national implementation of Directive 2013/34/EU successfully diminished the administrative burden experienced by small companies.