Proceedings of Annual Tokyo Business Research Conference
9 - 10 November 2015, Shinjuku Washington Hotel, Tokyo, Japan, ISBN: 978-1-922069-88-7
The Roles of Cost Accounting System Structure on Firm
Performance in the Thai Electrical and Electronics Industry
Somboon Saraphat
Sustainable competitive advantage through delivering the product or service with the lower cost when
compared with competitor is one of the key success factors for a business organization. The use of cost
information has played a crucial role in strengthening a firm strategic positioning. Analyzing the relevant
costs and benefits associated with each feasible alternative on a certain problem typically provides a firm
with the best alternative with the greatest overall benefit. The usefulness of cost information, however,
has been limited because of the poor designed costing system. Poor costing system might not be able to
provide high quality cost information and cannot provide relevant information to meet the need of users.
Generally, managers pay a special to and extensively use of good cost information as a significant part of
firm operational control and continuous business process improvement. Conversely, some managers
choose not to rely on cost information particularly if it not well established to best suit individual needs and
organizational contexts. Because of the limited studies on cost accounting system on firm performance as
an integrative manner, consequently, this research examines the roles of cost accounting system
structure (defined as six characteristics of cost accounting system including the sophistication of costing
system, frequency of cost report, detailed cost information, cost classification according to behavior,
variance calculation and investigation, and nonfinancial information) in determining firm performance
through cost information effectiveness, the use of cost information and organizational learning in the Thai
electrical and electronics industry. Overall, significant findings support the theoretical argument put
forward in the management accounting literature that more functional cost accounting systems provide
information of higher quality. Cost information effectiveness in this research is significantly driven by the
sophistication of cost accounting system as well as cost report frequency, the level of detailed cost
information, the extent to which cost variances are calculated and investigated, and nonfinancial
information provided to managers. Besides, it is also revealed that the greater cost information provided ,
the greater the extent of use of cost-based planning, decision making, and controlling, the higher degree
of organizational learning, and higher firm performance. As expected, a firm that promotes the learning
within an organization is more likely to achieve higher performance. For managerial implication, in order to
produce high quality cost information, firms need to design more appropriate cost accounting system
structure.
Keyword: Cost Accounting System Structure, Cost Information Effectiveness
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Somboon Saraphat, Faculty of Management Sciences, Kasetsart University Si Racha, Thailand. Email:
fmssbs@src.ku.ac, Tel. 6638 352830-40 #448 Fax. 6638 352380