Critique on the “Manager Effects” Research and Implications for Management Accounting Research

Abstract

ABSTRACT Management accounting researchers have been slow to explore the empirical implications of the “manager effect” on management control choices. We critique the “manager effect” literature and identify research opportunities for management accounting researchers. Since the publication of Bertrand and Schoar's (2003) seminal paper, which shows that individual managers have an effect on firm behavior, a large and growing body of accounting and finance research has used publicly available data to identify individual manager effects on a variety of firm outcomes. Management accounting researchers can add significant value to this research; for example, by exploring the control choices that a firm makes to mitigate the adverse consequences associated with some managerial characteristics. In this critique we first identify some of the theoretical and methodological challenges associated with the “manager effects” research and second identify opportunities for management accounting researchers to explore these effects while overcoming some of the limitations.