The appropriateness of statistical methods for testing contingency hypotheses in management accounting research

Abstract

In recent years, the contingency-based management accounting literature has been criticized for being fragmentary and contradictory as a result of methodological limitations. This study adds to this picture by showing that the theoretical meaning of some commonly used statistical techniques is unclear, i.e. the functional forms are not precise enough to be able to discriminate between several sometimes even conflicting theories of contingency fit. The study also shows that the techniques differ significantly in terms of how interaction effects between context and management accounting are modeled. This implies that some methods are only appropriate when theory predicts interaction effects in general while others are only appropriate in cases where theory specifies a more precise functional form of interaction such as symmetrical or crossover interactions. Based on these observations, several recommendations for future research are proposed.