An exploratory analysis of management accounting practices in the Arab Gulf Cooperative countries
John Daniel Mclellan
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Purpose – The aim of this research project is to examine the adoption rate of management accounting tools by businesses in the Gulf Co‐operative Council (GCC) countries and attempts to determine if significant variances in the use of management accounting tools by GCC businesses are contingent on a companies' ownership, legal structure, size or industry sector. The study covers a broad range of businesses, from many different business sectors in six different Arab countries. Design/methodology/approach – An online survey on the adoption rate of 41 Management Accounting Tools was used to collect data. The Institute of Management Accountants invited 453 CMA's in the Gulf region to participate in the Survey of Management Accounting Practices in the GCC area. Factor analysis was employed to test the effects of company characteristics on the choice of management accounting tools. Findings – The study finds that companies in the GCC rely on the more traditional management accounting practices such as budgeting rather than the more recently developed strategically focused tools such as activity based management and the use of the balanced scorecard. The research also shows that company characteristics play a significant role in the use of management accounting tools by businesses. Overall, international ownership and incorporation tend to increase the use of many management accounting practices. Research limitations/implications – Results should be generalized cautiously due to the small number of responding companies. The use of individual tools may not be completely explained by the chosen independent variables; other factors such as management's preference and/or the cost and benefit of the tool may affect choice. Originality/value – Management accounting practices of businesses in the GCC have never been studied before. This study updates the literature on the management accounting tools by businesses.