Management Control Systems 4th Edition by Kenneth MerchantManagement Control Systems 4th Edition by Kenneth Merchant

Management Control Systems 4th Edition

byKenneth Merchant, Wim Van der Stede

Paperback | May 5, 2017

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As the market-leading text for Management Control and performance measurement, this book will give you a thorough understanding of core concepts and key topics. Including a wide range of international case studies and real life examples means this is the ideal guide for understanding complex topics and bringing this subject to life.

Kenneth A. Merchant is the Deloitte & Touche LLP Chair of Accountancy at the University of Southern California. He is well-known internationally in the field of management accounting.   Wim A. Van der Stede is the CIMA Professor of Accounting and Financial Management at the London School of Economics and Political Science. An author ...
Title:Management Control Systems 4th EditionFormat:PaperbackDimensions:792 pages, 9.6 × 7.5 × 1.1 inPublished:May 5, 2017Publisher:Pearson EducationLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:1292110554

ISBN - 13:9781292110554

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Table of Contents

Preface xiii


Section i
The control Function of management


1 Management and Control

Management and control
Causes of management control problems
Characteristics of good management control
Control problem avoidance
Control alternatives
Outline of this text
Leo’s Four-Plex Theater
Wong’s Pharmacy
Private Fitness, Inc.
Atlanta Home Loan


Section ii
Management control alternatives and their effects


2 Results Controls

Prevalence of results controls
Results controls and the control problems
Elements of results controls
Conditions determining the effectiveness
of results controls
Offi ce Solutions, Inc.
Puente Hills Toyota
Kooistra Autogroep
Houston Fearless 76, Inc.


3 Action, Personnel, and Cultural Controls


Action controls
Action controls and the control problems
Prevention vs. detection 92
Conditions determining the effectiveness
of action controls
Personnel controls
Cultural controls
Personnel/cultural controls and
the control problems
Effectiveness of Personnel/cultural
Witsky and Associates, Inc.
The Platinum Pointe Land Deal
EyeOn Pharmaceuticals, Inc.
Axeon N.V.


4 Control System Tightness


Tight results control
Tight action controls
Tight personnel/cultural controls
Controls at the Bellagio
Casino Resort
Lincoln Electric: Venturing Abroad
PCL: A Breakdown in the Enforcement
of Management Control


5 Control System Costs


Direct costs
Indirect costs
Adaptation costs
Philip Anderson
Sunshine Fashion: Fraud, Theft,
and Misbehavior among
Better Beauty, Inc.
Fit Food, Inc.
Atlantis Chemical Industries


6 Designing and Evaluating


Management Control Systems
What is desired and what is likely
Choice of controls
Choice of control tightness
Adapting to change
Keeping a behavioral focus
Maintaining good control
Diagnostic Products Corporation
Game Shop, Inc.
Family Care Specialists Medical Group, Inc.
AirTex Aviation


Section III
Financial Results Control Systems


7 Financial Responsibility Centers


Advantages of financial results control systems
Types of financial responsibility centers
Choice of financial responsibility centers
The transfer pricing problem
Kranworth Chair Corporation
Zumwald AG
Global Investors, Inc.


8 Planning and Budgeting


Purposes of planning and budgeting
Planning cycles
Target setting
Planning and budgeting practices,
and criticisms
Citibank Indonesia
HCC Industries
Royal Wessanen NV
Multiple Versions of the Plan
Vitesse Semiconductor Corporation
VisuSon, Inc.: Business Stress Testing


9 Incentive Systems


Purposes of incentives
Monetary incentives
Incentive system design
Criteria for evaluating incentive systems
Group rewards
Harwood Medical Instruments PLC
Superconductor Technologies, Inc.
Raven Capital, LLC


Section IV
Performance Measurement Issues and their Effects


10 Financial Performance Measures and their Effects


Value creation
Market measures of performance
Accounting measures of performance
Investment and operating myopia
Return-on-investment measures
of performance
Residual income measures as a possible
solution to the ROI measurement
Behavioral Implications of Airline Depreciation
Accounting Policy Choices
Las Ferreterías de México, S.A. de C.V.
Industrial Electronics, Inc.
Haengbok Bancorp
Corbridge Industries, Inc.
King Engineering Group, Inc.
Berkshire Industries PLC


11 Remedies to the Myopia Problem


Pressures to act myopically
Reduce pressures for short-term profit
Control investments with preaction reviews
Extend the measurement horizon
(use long-term incentives)
Measure changes in value directly
Improve the accounting measures
Measure a set of value drivers
Catalytic Solutions, Inc.
Dortmunder-Koppel GmbH
Johansen’s: The New Scorecard


12 Using Financial Results Controls in the Presence of Uncontrollable Factors


The controllability principle
Types of uncontrollable factors
Controlling for the distorting effects
of uncontrollables
Other uncontrollable factor issues
Olympic Car Wash
Beifang Chuang Ye Vehicle Group
Hoffman Discount Drugs, Inc.
The Stimson Company
Bank of the Desert (A)
Bank of the Desert (B)
Fine Harvest Restaurant Group (A)
Fine Harvest Restaurant Group (B)


Section V
Corporate Governance, Important Control-Related Roles, and Ethics


13 Corporate Governance and Boards of Directors


Laws and regulations
The Sarbanes-Oxley Act
Boards of directors
Audit committees
Compensation committees
Arrow Motorcar Corporation
Golden Parachutes?
Pacific Sunwear of California, Inc.
Entropic Communications, Inc.
Bio/Precise Medical Devices, Inc.


14 Controllers and Auditors


Don Russell: Experiences of a Controller/CFO
Desktop Solutions, Inc. (A): Audit
of the St. Louis Branch
Desktop Solutions, Inc. (B): Audit
of Operations Group Systems
Andrew G. Scavell, Chief Risk Officer


15 Management Control-Related Ethical Issues


Good ethical analyses and
their importance
Why do people behave unethically?
Some common management
control-related ethical issues
Spreading good ethics within
an organization
Two Budget Targets
Conservative Accounting in the General
Products Division
Education Food Services at Central
Maine State University
The “Sales Acceleration Program”
The Expiring Software License
Wired, PLC
Mean Screens USA, Inc.
Lernout & Hauspie Speech Products


Section V
Management Control when Financial Results are not the Primary Consideration


16 Management Control in Not-for-profit Organizations


Corporations, B corporations, and
Key differences between for-profit
and not-for-profit organizations
Goal ambiguity and conflict
Difficulty in measuring and
rewarding performance
Accounting differences
External scrutiny
Employee characteristics
SCI Ontario: Achieving, Measuring, and
Communicating Strategic Success
University of Southern California:
Responsibility Center Management System
Amanco: Developing the Sustainability


Editorial Reviews

“If this book were fiction, I would refer to it as a real page-turner” Eddy Vaassen, Tilburg University


“The book provides a comprehensive view of management control systems and is written in a very engaging style” Paul Summers, Summit Accountancy Training / University of Liverpool