Management accounting methods for financial decisions: Case of industrial companies in Jordan

Abstract

Management accounting plays a critical role in decision making since it supplies accounting information that would be helpful to managers in making critical decisions for an organization. In light of this assertion, the aim of the study was to determine how the listed Jordanian industrial organizations used management accounting techniques to make financial decisions. The study employed the descriptive research design and used primary data to collect the information on the related objectives of the study. The target population for this study was the employees of industrial enterprises in Jordan. Specifically, the employees forming the part of the sample were the managers and non-managers (excluding lower-level staff) working in industrial companies of Jordan. The industrial firms from where the employees were chosen included the industrial firms listed on the Amman Stock Exchange. The sample size for the study has been 371 employees, selected based on the Krejcie and Morgan rule. The study’s findings supported the notion that budgeting, financial ratio analysis and activity-based costing are the most widely used management accounting techniques in these organizations. The results show that employees differ in their perception on the role of management accounting techniques in financial decision making. Specifically, the results of the study confirm the significant p-value (0.000) for t-statistics and f-value, thereby confirming that employees differ in their perception regarding the role of management accounting in financial decision making based on gender, type of job and years of experience.