MANAGEMENT ACCOUNTING INFORMATION SYSTEM EFFECTIVENESS AND

BUSINESS VALUE CREATION: AN EMPIRICAL STUDY OF THAI LISTED FIRMS

Khajit Konthong and Phapruke Ussahawanitchakit

Faculty of Accountancy and Management
Mahasarakham University, Thailand

ABSTRACT

This study aims at investigating the influence of management accounting information system
(MAIS) effectiveness on business value creation via information quality and managerial
performance as the mediating variables. It also examines the influences of information
technology intensity and competitive pressure that moderate the relationships. In addition, it
develops the new construct of MAIS effectiveness that consists of systematic information
integration, apparent process reduction, responsibility to diversity requirements, and effective
cost management. Data were collected by survey questionnaires administrated to the heads
of accounting departments of Thai listed firms, 126 completed questionnaires are used in the
analysis. The results demonstrate that firms with the higher degree of MAIS effectiveness
potentially promote greater business value creation through information quality and
managerial performance. Surprisingly, the results also indicate that technology intensity and
competitive pressure do not moderate the MAIS effectiveness-business value creation
relationships. Contributions and suggestions for further research are also provided.

Keywords: Management Accounting Information System, Systematic Information Integration,

Apparent Process Reduction, Responsibility to diversity requirements, Effective Cost
Management, Business Value Creation

1. INTRODUCTION

Nowadays, global competition motivates companies to take advantage of what they can to
remain competitive. Companies need to enhance their ability to differentiate themselves from
their competitors and create value for their customers (Porter, 1980). To achieve the
competitive advantages, companies attempt to adopt their business procedures and strategy
for the consistency of their ability for the greatest business administration efficiency.
Therefore, they require the accurate, reliable, timely, and beneficial information to support
their strategic positioning and management decision making. Information system
implementation is the key solution that most companies attempt to develop to sustain their
business activities, it has influences on the efficiency of business operation processing.
Consequently, companies with the productiveness information system implementation that fits
contextual variables can provide the appropriate information response to requirements and
potentially promote greater competitive advantages, firm performance and business value
creation (Nicolaou, 2000, 2002; Choe, 2004; Jermias and Gani, 2004; Boulianne, 2007;
Chapman and Kihn, 2008).

To generate the beneficial information, companies must set the information system that have
systematically processing format containing the formats of data collecting, data classifying, data
processing, data storing, and information reporting. The outputs of information system must
integrate from the various operation functions in the companies. According to resource based
view of the firm (Barney, 1996), which stated that firm develops unique internal capabilities to
gain competitive advantage. Management information system (MIS) is a capability that
provides the infrastructure to manage information and coordinate activities within the firm,
which firm takes it to enhance the quality of information processing. This is because MIS
coordinates all of operation functions in companies and applies the database management
system to process the information. Especially, MIS contains accounting system which is the
core system of firm that contains all of financial and involved data from every departments
and functions in the companies (Gordon and Seller, 1984). As a result, appropriated accounting
information system design is important for the efficient business administration. Prior research
indicated that information produced by management accounting information systems (MAIS)
can improve organization effectiveness (Chenhall, 1997; Fullerton and McWatters, 2002;

1
Choe, 2004). This study defines MAIS as the information system that provides the information
to support management accounting techniques (e.g. total quality management, just-in-time
management, and balanced scorecard). As mentioned above, integrated information system
is necessary to enhance the efficiency of MAIS (Rom and Rohde, 2007).

In this study, we developed a construct of MAIS effectiveness from the previous literatures
that consists of four dimensions: systematic information integration, apparent process
reduction, responsibility to diversity requirements, and effective cost management.
Additionally, we postulated that the effectiveness of MAIS resulted in the information quality
and managerial performance, therefore, resulted in the creation of business value. As a
result, the purpose of this study is to investigate the relationship between MAIS effectiveness
and business value creation through the mediating effects of information quality and
managerial performance. Moreover, in our conceptual framework, we operated information
system intensity as the moderator of the relationships between MAIS effectiveness,
information quality, and managerial performance (Bradford and Florin, 2003; Arunachalam,
2004). We also examined the moderating influences of competitive pressure on the
relationships between information quality, managerial performance, and business value
creation (Bradford and Florin, 2003).

The remaining of this paper is organized as follows. The second section provides the relevant
literature of all constructs and hypotheses development. The third section describes the
research design including data collection, measurement of the variables, reliability and
validity, and statistical technique. Next, we describe the results of investigation and discussion
follow by the contributions and direction for future research. Finally, the sixth section provides
the conclusion of the study.

2. LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

The research model of this study is illustrated in Figure 1. The model posits that the business
value creation depends on MAIS effectiveness via information quality and managerial
performance as mediators. In addition, information technology (IT) intensity has an influence
on the relationship between MAIS effectiveness, information quality, and managerial
performance. Further, competitive pressure has an influence on the relationship between
information quality, managerial performance, and business value creation.

FIGURE 1
RESEARCH MODEL

Information
Technology Competitive
Intensity Pressure

H6, H7
H8, H9
Information Quality
MAIS effectiveness
Systematic Information
H1 H4
Integration
Business Value
Apparent Process Reduction H3
Creation
Responsibility to diversity
requirements H5
Effective Cost Management H2

Managerial
Performance

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2.1 Management Accounting Information System Effectiveness
MAIS refers to the accounting information system that collect, classify, process, summarize,
and report managers to support their planning, control, and evaluation resulting in the
improvement of their managerial performance (Bruggeman and Slagmulder, 1995). MAIS,
basically confined within organizational process of accounting, is the information integration
system (IIS) that provides data form all departments and functions in organizations, which
integrate and draw data from a single comprehensive database (Chapman and Kihn, 2008).
The database collects data from and feeds data into modular applications nourishing
practically all of company’s business activities (Davenport, 1998). MAIS, such as Enterprise
Resource Planning system (ERP), pushes company toward full integration even when a
certain degree of business-unit segregation, and customizes the generic process that is the
source of competitive advantage (Davenport, 1998). Prior studies demonstrated that firms
with the higher degree of MAIS implementation effectiveness lead to the higher degree of
information quality (O’ Donnell and David, 2000; Dechow and Mouritsen, 2005; Ismail and
King, 2005), resulting in the improvement of managerial performance (O’ Donnell and David,
2000; Nicolaou, 2002; Choe, 2004; Rikhardsson and Kræmmergaard, 2006; Dunk, 2007;
Chapman and Kihn, 2008) and the creation of business value (Ray, Robbert and Brocious,
2003; Jermias and Gani, 2004; Matolcsy, Booth and Wieder, 2005).

For the construct of MAIS effectiveness, this study developed four dimensions of MAIS
effectiveness that consists of systematic information integration, apparent process reduction,
responsibility to diversity requirements, and effective cost management. First, for the
systematic information integration, according to above, MAIS is the IIS that integrates all of
business activities in a company. Booth, Matolcsy and Wieder (2000) identified the
characteristics of IIS that it consists of three dimensions: data integration, hardware/software
integration, and information integration. Data integration refers to the characteristic that data
stored and maintained in only single database. Hardware/software integration is the
connection of computers that can communicate and transfer data accompany with one
another. Information integration refers to the alternate of information among departments and
business functions (Booth, Matolcsy and Wieder, 2000). Similarly, IIS provides information
generated from the systematization and coordination record keeping, categorization and
aggregation of transactions, and ultimately summarization of transactions (Champman, 2005).
Moreover, prior study defined accounting information system integration as the integration in
internal accounting information system applications and the corporation between
interorganizational systems and the internal accounting information system applications
(Davenport, 1998; Nicolaou, 2000). Thus, we measure this dimension with the degree of
network orientation, maintenance data in only single database, functional integration, and
information integration.

Second, the apparent process reduction, MAIS, such as ERP, is built around the best practice
in specific industries (O’ Leary, 2002). ERP implementations substantially affect the whole
organization procedures and generally associated with process reduction (Davenport, 1998).
The successful of ERP implementation impacts on organizations that reengineering their
processes and maximize the benefit from the implementation (Bradford and florin, 2003).
Prior study indicated that MAIS effectiveness has meant to decrease the redundancy of data
entries and the work involved in consolidation. Data are entered just once into common
database. In addition, MAIS effectiveness also increases the automatic transaction
processing, analyzing, and redesigning the reporting procedures (Granlund and Malmi, 2002).
To measure the apparent process reduction, this study focuses on the reductions of
procedures, document flows, and processing time.

Next, according to environment uncertainty, the greater degree of environment uncertainty

influences on the degree of information requirements of management accounting. The
decision making and control activities need to change upon the uncertainty of technical and
the change of firm conditions. Therefore, the different kinds of management accounting
practices and the new diversity requirements of information are emerged (Choe, 2004).
Efficiency MAIS must generate a large number of usefulness and flexible information to cope
with frequent changes responding to the diversity requirements that continually occur.
Consequently, this study measures the responsibility to diversity requirements on the
flexibility of reporting, accessing, and decision support information.

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Finally, for the effective cost management, prior study indicated that MAIS effectiveness tends
to reduce cost of operations. The separation of various business function procedures causes
the increasing of transaction costs. As mentioned above, effective MAIS implementation can
diminish the redundancy and complexity of transaction processing (Davenport, 1998;
Granlund and Malmi, 2002). Therefore, the appropriated MAIS implementation potentially
promotes the transaction cost reduction. As a result, the reductions of documentation and
reporting, operation, and communication costs among departments and business functions in
an organization are assigned to measure the effective cost management in this study.

Prior studies investigated the relationship between the effectiveness of MAIS implementation
and information quality. The results indicated that the degree of MAIS effectiveness positively
associate with the completeness, accuracy, timeliness, and validity of information (O’ Donnell
and David, 2000; Ismail and King, 2005). Moreover, prior studies suggested that management
accounting system which contained the relevant information had positive relationship to
managerial performance, hence, related to the improvement of business value (e.g. Tsui,
2001; Bourguignon, 2005; Chong and Eggleton, 2007). According to literature, we postulated
the hypotheses as follows:

Hypothesis 1: MAIS effectiveness (systematic information integration, apparent process

reduction, responsibility to diversity requirements, and effective cost reduction) will have a
significantly positive relationship with information quality.

Hypothesis 2: MAIS effectiveness (systematic information integration, apparent process

reduction, responsibility to diversity requirements, and effective cost reduction) will have a
significantly positive relationship with managerial performance.

2.2 Information Quality

In this study, we define information quality as the information that consists of accuracy,
completeness, timeliness, and validity characteristics. According to Boritz (2005), accuracy
refers to the information corresponds to the reality and neutrality. Completeness refers to
information that conveys the full dimensionality of the user requirements. Timeliness refers to
information that represent in the real-time and current status that significant for the effective of
managerial decision making. Validity is defined as information that availability for the authority
granted users. Information quality resulted from MAIS implementation creates the value of the
firms such as managerial performance and customer satisfaction (Bourguignon, 2005; Chong
and Eggleton, 2007). In this study, we hypothesized as follows:

Hypothesis 3: Information quality will have a significantly positive relationship with managerial
performance.

Hypothesis 4: Information quality will have a significantly positive relationship with business
value creation.

2.3 Managerial Performance

According to Mahoney, Jardee and Corroll (1963), managerial performance was described by
the performance of management in planning, investigating, coordinating, evaluating,
supervising, staffing, negotiating, and representing. Prior studies suggested that management
accounting system implementation effectiveness had positive association with managerial
performance, therefore, firms which had effective managerial performance achieved to
improve their business value (Ray, Robbert and Brocious, 2003; Jermias and Gani, 2004;
Matolcsy, Booth and Wieder, 2005). In addition, prior studies indicated that MAIS
effectiveness had the positive relationship to business value of both customer value
(Wickramasinghe and Mills, 2004; Anderson, Jolly and Fairhurst, 2007) and stakeholder value
(Granlund and Malmi, 2002; Hunton, Lippincott and Reck, 2003; Matolcsy, Booth and Wieder,
2005; Nicolaou, 2004; Nicolaou and Bhattacharya, 2006; Rikhardsson and Kræmmergaard,
2006). According to above, we hypothesized as follows:

Hypothesis 5: Managerial performance will have a significantly positive relationship with

business value creation.

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2.4 Information Technology Intensity
Organizations emphasized on IT investment and training can affect MAIS effectiveness. This
is because MAIS utilization cannot gain the benefit in short-term. The greater IT intensity, the
contribution to MAIS technology competency, subjective incentives will be the greater reliance
on skills and human capital tends to use IT more (Poston and Grabski, 2001; Bradford and
Florin, 2003; and Arunachalam 2004). Hitt and Brynjolfsson (1997) indicated that IT
investment moderated the impact of decentralized organization structure on IT effectiveness
and organization performance. However, Bradford and Florin (2003) found that IT training has
positively affected user satisfaction but not significantly associated with the achievement of
performance measure. According to literature, we postulated the hypotheses as follows.

Hypotheses 6: The greater the IT intensity is will be the higher the positive relationships
between MAIS effectiveness and information quality.
Hypotheses 7: The greater the IT intensity is will be the higher the positive relationships
between MAIS effectiveness and managerial performance.

2.5 Competitive pressure

As organization’s competitive dynamics, it has a higher influence on the firm’s strategic
decisions (Porter, 1980). Competitive pressure consists of rivalry among existing competitors,
threat of new entrances, substitute products/services, bargaining power of suppliers, and
bargaining power of customers. According to resource based view of the firm, MAIS is a
capability that firm develops to gain competitive advantage. Thus, when a firm uses MAIS to
support management accounting to enhance their performance, other companies confront
pressure to eliminate their competitor’s advantage as soon as possible (Poston and Grabski,
2001). Either the incentives to gain competitive advantage or eliminate their competitors, we
hypothesized as follows:

Hypothesis 8: The greater the competitive pressure is will be the higher the positive
relationships between information quality and business value creation.
Hypothesis 9: The greater the competitive pressure is will be the higher the positive
relationships between managerial performance and business value creation.

3. RESEARCH DESIGN

3.1 Data Collection

Data for sample firms were obtained from The Stock Exchange of Thailand’s database. The
survey instruments administrated to 497 heads of accounting departments in Thai listed firms,
as the key participants, via mail and returned by the respondents directly to the researcher to
ensure confidentiality. Each instrument consisted of the questionnaire and cover letter
containing an explanation of the research as well as instructions for completing the survey.
With regard to the mailed questionnaires, 1 survey was undeliverable from original 497 mailed
and it was returned. After four weeks, 128 questionnaires were received. Thus, the response
rate was 25.80%. However, there are 2 received questionnaires uncompleted and hence they
were not included in the data analysis. According to Aaker, Kumear, and Day (2001), the
response rate for a 20% mail survey considered acceptable. Therefore, the response rate of
this study is satisfactory acceptance. Additionally, non-response bias was investigated by t-
test, a comparison of first wave and second wave, the results were not significant. Hence, it
implied that non-response bias does not pose a significant problem for this study.

General information of respondents, females represented approximately 69.8% of the

returned questionnaires. The average age was between forty and fifty-one years old (42.9%)
and had more than fifty years of accounting experience (57.1%). The firm’s demographic data
indicated that the majority respondents were industry product firms (17.5%) with the total
assets more than 50 Million Baht (95.2%) and with more than 300 employees (62.7%).

3.2 Measures
All variables were measured by Likert’s five-point scales, ranging from 1 (very strongly
disagree) to 5 (very strongly agree). Measurements of dependent variable, independent
variables, moderating variables and control variables were adapted from literatures and
described as follows. For the dependent variables, value creation was categorized into two

5
perspectives of stakeholders that relate to the firm, customer value and shareholder value
(Bourguignon, 2005). Customer value refers to the “value is what buyers are willing to pay,
and superior value stems from offering lower prices than competitors for equivalent benefits
or providing unique benefits that more than offset a higher price”, such as customer
satisfaction and customer loyalty (Porter, 1980, p. 3). Shareholder value refers to the value
that efficient firm increases the wealth of it shareholders, such as economic value and market
value (Bourguignon, 2005). Business value creation is measured by ten items that adapted
with some modification from Bourguignon (2005), which measure on customer and
shareholder value creation. Information quality that consisted of completeness, accuracy,
timeliness, and validity is measured by six items that adapted with some modification from
Boritz (2005). The measurement of managerial performance was adapted from Mahoney,
Jardee and Corroll (1963), which measure on planning, investigating, coordinating,
evaluating, supervising, staffing, negotiating, and representing performance. Eight items were
developed to evaluate the degree of managerial performance.

For the independent variables of the study, MAIS effectiveness comprised four dimensions;
systematic information integration, apparent process reduction, responsibility to diversity
requirements, and effective cost management. We developed the measurements of such
dimensions form previous studies. First, there are four items that measure systematic
information integration which developed from Booth, Matolcsy and Wieder (2000) and
Nicolaou (2000). Second, apparent process reduction measured by three items developed
from Granlund and Malmi (2002), which measure the reductions of procedures, document
flows, and processing times. Third, responsibility to diversity requirements measures the
flexibility of reporting, accessing, and decision support information. There are three items
which adapted from Choe (2004) were measured this construct. Finally, there are three items
that adapted from Choe (2004) which measure the effective cost management.

For the moderators of the study, IT intensity is measured by six items adapted with some
modification from Bradford and Florin (2003) and Arunachalam (2004). This construct was
developed by focusing on the realization of the usefulness of IT investment and knowledge
transfer. Competitive pressure adapted from Porter (1980) and Bradford and Florin (2003)
that consisted of three items to measure this construct.

The control variables including firm size, industry type, and firm age were also likely to affect
the relationships. Firm size may affect the capacity of a firm to implement MAIS in order to
achieve business value creation. The size of firm has been used as a proxy for organizational
complexity, slack resources, and scale (Hunton, Lippincott and Reck, 2003). It was measured
by the total asset of the firm. Industry type may impact the firm information requirements and
the degree of MAIS implementation result in the information quality, managerial performance,
and business value (Ittner, Lanen and Larcker, 2002). It was measured by the type of Thai
listed firms. Finally, firm performance is also likely to be related to the age of the facilities
(Ittner, Lanen and Larcker, 2002). Consequently, we controlled firm age by operating the
number of years since firm start-up as the proxy.

3.3 Reliability and Validity

We concerned about the reliability and validity in this study. This study utilized confirmatory
factor analysis to examine the validity of data in the questionnaires. It used to investigate the
underlying relationships of a large number of items and to determine whether they can be
reduced to a smaller set of factors. The factor analyses conducted were done separately on
each set of the items representing a particular scale due to limited observations. This analysis
has a high potential to inflate the component loadings. Hence, a higher rule-of-thumb, a cut-
off score of 0.40, was accepted (Nunnally and Berstein, 1994). All factor loadings are greater
than the 0.40 cut-off score and are statistically significant. Table 1 shows factor loading
scores ranging from 0.592 to 0.930. For the reliability of the measurements, they were
evaluated by Cronbach alpha coefficients that should greater than 0.70 (Nunnally and
Berstein, 1994). Alpha coefficients of constructs illustrated in Table 1, the value ranging from
0.558 to 0.910. The highest coefficients for managerial performance and IT intensity and the
lowest coefficient for responsibility to diversity requirements. The internal reliability of
responsibility to diversity requirements was acceptable at 0.558 as it fell within the expected
range for an exploratory study, which is 0.50-0.60 (Nunnally 1978). However, there are prior

6
IT research accepted the alpha coefficients that more than 0.40 (Rowe and Struck, 1999).
Hence, these constructs are appropriate for the analysis.

TABLE 1
RESULTS OF MEASURE VALIDATION

Variables Factor Loadings Cronbach Alpha

Business value creation (BVAL) 0.667-0.860 0.904
Information quality (INFOQ) 0.613-0.895 0.888
Managerial performance (MGTPER) 0.758-0.841 0.910
Systematic information integration (INTEG) 0.637-0.845 0.769
Apparent process reduction (PRORE) 0.815-0.883 0.813
Responsibility to diversity requirements (RESP) 0.592-0.814 0.558
Effective cost management (COST) 0.852-0.902 0.862
Information technology intensity (IT) 0.705-0.924 0.910
Competitive pressure (COMP) 0.862-0.930 0.892

3.4 Statistical Technique

All variables are the metric scales, thus the Ordinary Least Square (OLS) regression analysis
is appropriated statistical technique to investigate the hypothesized association and estimate
coefficients affecting of the MAIS effectiveness on information quality, managerial
performance, and business value creation (Hair, Black, Babin, Anderson and Taltham, 2006).
The established research models were presented as follows:

Equation 1: INFOQ = β01 + β1 INTEG + β2 PRORE + β3 RESP + β4 COST +

β5 TASSET + β6 INDUST + β7 AGE + ε
Equation 2: INFOQ = β02 + β8 INTEG + β9 PRORE + β10 RESP +
β11 COST + β12 IT + β13 INTEG*IT + β14 PRORE*IT +
β15 RESP*IT + β16 COST*IT + β17 TASSET +
β18 INDUST + β19 AGE + ε
Equation 3: MGTPER = β03 + β20 INTEG + β21 PRORE + β22 RESP +
β23 COST + β24 TASSET + β25 INDUST +
β26 AGE + ε
Equation 4: MGTPER = β04 + β27 INTEG + β28 PRORE + β29 RESP +
β30 COST + β31 IT + β32 INTEG*IT + β33 PRORE*IT +
β34 RESP*IT + β35 COST*IT + β36 TASSET +
β37 INDUST + β38 AGE + ε
Equation 5: MGTPER = β05 + β39INFOQ + β40 TASSET + β41 INDUST +
β42 AGE + ε
Equation 6: BVAL = β06 + β43INFOQ + β44MGTPER + β45 TASSET +
β46 INDUST + β 47 AGE + ε
Equation 7: BVAL = β07 + β48 INFOQ + β49 MGTPER + β50 COMP +
β51 INFOQ*COMP + β52 MGTPER*COMP +
β53 TASSET + β54 INDUST + β55 AGE + ε

4. RESULTS AND DISCUSSION

Descriptive statistics and correlation matrix for all variables are shown in Table 2. All
correlation coefficients of independent variables are smaller than 0.8 and all variance inflation
factors (VIF) values are smaller than 10, indicating that there are no problems of
multicolinearity of independent variables of the study (Hair, Black, Aderson and Tatham,
2006). Consistent with the suggestion by Neter, Wasserman and Kutner (1985), the VIF
values in this study are below the cut-off value of 10, indicating that the independent variables
are not correlated with each other.

4.1 Effects of MAIS Effectiveness on Information Quality and Managerial Performance

The results of OLS regression analysis of the relationships among MAIS effectiveness,
information quality, and managerial performance are presented in Table 3. As a result,
models 1 and 3 indicated that all dimensions of MAIS effectiveness except systematic

7
 information integration have significant positive relationships with information quality and
managerial performance. Apparent process reduction significantly positively relates to
information quality (β2 = .240, p < 0.05) and managerial performance (β21 =.205, p < 0.10).
Responsibility to diversity requirements has positive influence on information quality (β3 = .
322, p < 0.01) and managerial performance (β22 =.292, p < 0.01).

TABLE 2
DESCRIPTIVE STATISTICS AND CORRELATION MATRIX

Variables BVAL INFOQ MGTPER INTEG PRORE RESP COST IT COMP TASSET INDUST AGE
Mean 3.769 3.950 3.815 4.234 4.053 4.027 3.820 3.783 4.140 0.952 4.460 0.929
S.D. 0.515 0.528 0.528 0.475 0.594 0.538 0.682 0.572 0.655 0.214 2.127 0259
IINFOQ 0.582***
MGTPER 0.707*** 0.715***
INTEG 0.142 0252*** 0.290***
PRORE 0.502*** 0.526*** 0.503*** 0.489***
RESP 0.406*** 0.491*** 0.479*** 0.542*** 0.606***
COST 0.414*** 0.487*** 0.467*** 0.306*** 0.555*** 0.318***
IT 0.334*** 0.520*** 0.504*** 0.451*** 0.411*** 0.503*** 0.455***
COMP 0.343*** 0.287*** 0.281*** 0.443*** 0.381*** 0.430*** 0.184** 0.406***
TASSET -0.190** -0.100 -0.101 0.034 0.019 -0.560 -0.061 -0.035 0.009
INDUST 0.027 0.029 0.079 0.048 0.131 0.090 0.098 0.098 -0.139 -0.057
AGE 0.131 0.080 0.137 -0.10 0.020 -0.001 0.153 -0.010 -0.054 0.083 -0.100
** p < 0.05, *** p< 0.01

TABLE 3
RESULTS OF OLS REGRESSION ANALYSIS a

Dependent Variables
Independent
INFOQ MGTPER
Variables
1 2 3 4
-.122 -.143 -.042 -.099
INTEG
(.088) (.088) (.090) (.088)
.240** .183 .205* .268**
PRORE
(.105) (.113) (.107) (.112)
.322*** .213** .292*** .155
RESP
(.096) (.099) (.099) (.099)
.285*** .219** .252*** .099
COST
(.088) (.093) (.090) (.092)
.289*** .324***
IT
(.090) (.089)
.040 -.080
INTEGxIT
(.094) (.093)
-.202** .058
PRORExIT
(.098) (.098)
.090 -.503
RESPxIT
(.081) (.080)
.054 .301***
COSTxIT
(.089) (.089)
-.330 -.375 -.370 -.267
TASSET
(.339) (.325) (.347) (.323)
-.026 -.035 .004 -.018
INDUST
(.034) (.033) (.035) (.033)
.120 .215 .393 .349
FIRMAGE
(.283) (.275) (.290) (.273)

Adjusted R2 .365 .423 .334 .431

* p < 0.10, ** p < 0.05, *** p< 0.01

a
Beta coefficient with standard errors in parenthesis

Effective cost reduction significantly positive relate to information quality (β4 =.285, p < 0.01)
and managerial performance (β23 =.252, p < 0.01). Consistently, prior studies indicated that

8
firms with the higher degree of MAIS implementation effectiveness lead to the higher degree
of information quality (O’ Donnell and David, 2000; Dechow and Mouritsen, 2005; Ismail and
King, 2005). In addition, Dunk (2007) investigated the relationship between quality of
information system’s information and managerial performance. The result suggested that
there is positive relationship between information quality and managerial performance when
firm confronted with high budget pressure. However, systematic information integration is not
significant associate with information quality and managerial performance. Possibly, the
integration of information from the various functions results in information load. Prior research
indicated that information load (higher number of decision cues) can lead to less consistent
decisions (Chewning and Harrell, 1990; Stocks and Harrell, 1995). As the results, Hypotheses
1 and 2 are partially supported that firms with higher degree of MAIS effectiveness potentially
promote greater information quality and managerial performance.

4.2 The relationships between Information Quality, Managerial Performance and

Business Value Creation
Table 4 shows the results of OLS regression analysis of the relationship between information
quality and managerial performance. Information quality has a significant positive influence on
managerial performance (β39 = .703, p < 0.01). The results also indicate that there are
significant positive influence of information quality on business value creation (β43 = .150, p <
0.10) According to the existing literature, information quality positively relates to managerial
performance and the creation of business value (O’ Donnell and David, 2000; Choe, 2004;
Boritz, 2005; Ismail and King, 2005). Hence, Hypotheses 3 and 4 are supported.

The significant positive influence of managerial performance and business value creation (β44
= .538, p < 0.01). Similar to Tsui (2001) and Chong and Eggleton (2007), they found the
positive association between managerial performance and business value creation.
Therefore, Hypothesis 5 is supported.

4.3 Moderating Effects of Information Technology Intensity

To investigate the moderating effects of IT intensity, we entered the interaction terms of each
dimension of MAIS effectiveness and IT intensity in models 2 and 4. Table 3 presented the
results of these investigations. IT intensity does not have moderating effects on the
relationships between systematic information integration, responsibility to diversity
requirements, and effective cost management on information quality and managerial
performance. Surprisingly, the results of model 2 indicated that the stronger IT intensity is the
higher the negative relationship between apparent product reduction and information quality
(β53 = -.202, p < 0.05). Firm that focuses on IT investment reduces the influence of apparent
process reduction on information quality. Possibly, firm that has higher degree of IT intensity
will be results in the reduction of the information of insignificant processes, while users adhere
to the traditional information reporting, therefore, they perceived that information from MAIS
does not have quality. Thus, Hypothesis 6 is not supported.

To explain the influences on managerial performance, the results of model 4 indicated that
there are positive moderating effects of IT intensity on the relationship between effective cost
management and managerial performance (β35 = .301, p < 0.01). Thus, the results are
partially supported by Hypothesis 7.

4.4 Moderating Effects of Competitive Pressure

To explain the moderating effects of competitive pressure, the results from Table 4 indicated
that competitive pressure does not moderate both the relationship between information quality
and business value creation (β51 = -.093, p = .318) and the relationship between managerial
performance and business value creation (β52 = .090, p = .324). Surprisingly, the interaction
terms of both information quality and managerial performance on competitive pressure are
not significant. In the situation with competitive pressure, firms that have powerful information
quality and managerial performance may not distress from competitive pressure. Similarly,
Nicolaou (2002) investigated the influences of adoption of MAIS on firm performance. The
results indicated that the interaction between environment pressure and MAIS adoption has
no effect on perceived firm performance. Thus, Hypotheses 8 and 9 are not supported.

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 TABLE 4
RESULTS OF OLS REGRESSION ANALYSIS a

Dependent Variables
Independent
MGTPER BVAL
Variables
5 6 7
.703*** .150* .117
INFOQ
(.090) (.090)
.538*** .553***
MGTPER
(.091) (.091)
.161**
COMP
(.068)
-.093
INFOQxCOMP
(.092)
.090
MGTPERxCOMP
(.091)
-.159 -.572* -.575*
TASSET
(.296) (.297) (.298)
.031 -.012 .000
INDUST
(.030) (.030) (.030)
.349 .182 .269
FIRMAGE
(.158) (.248) (.247)

Adjusted R2 .508 .508 .523

* p < 0.10, ** p < 0.05, *** p< 0.01

a
Beta coefficient with standard errors in parenthesis

5. CONTRIBUTIONS AND FUTURE DIRECTIONS FOR RESEARCH

5.1 Theoretical Contributions and Future Direction for Research

This study is intends to provide a clearer understanding of MAIS effectiveness that has
significant relationships with information quality and managerial performance, hence, result in
the enhancement of business value. The study provides important theoretical contributions
expanding on previous knowledge and literature on MAIS effectiveness, information quality,
managerial performance, and value creation. For advancing the field theoretically, this paper
develops new construct of MAIS effectiveness that consists of four dimensions including
systematic information integration, apparent process reduction, responsibility to diversity
requirements, and effective cost management. This study directly links MAIS effectiveness to
business value creation through a mediating effect of information quality and managerial
performance. In addition, IT intensity and competitive pressure are assigned as moderating
variables in the model. Thus, this is one of first known empirical studies that investigate in
Thai listed firms. According to the results, there are some suggestions for further research.
First, MAIS effectiveness construct is first developed. Therefore, to generalize this construct,
it needs to investigate with other types of sample. Second, the moderating effects of IT
intensity and environment pressure have no significant influence on the relationships among
MAIS effectiveness, information quality, managerial performance, and business value
creation. Further research is needed to conceptualize the measurement of these variables.
Finally, according to the smaller Cronbach alpha value of responsibility to diversity
requirements and some insignificant relationships, further research needs to collect data from
a larger population or a comparative population in order to increase the level of reliable result.

5.2 Managerial Contributions

The implications for owners, executives and managers, this study helps organizations to
understand that MAIS implementation is significant to enhance information quality and
managerial performance that result in creation of business value. Organizations should
develop MAIS response to information integration, process reduction, responsibility to
diversity requirements, and cost management. Managers may put more emphasis on the
usage of quality information to enhance their strategic planning and managerial decision

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making. To maximize the business value, organization should develop the appropriate MAIS
according to the contingent variables. When the MAIS has maximized effectiveness,
organizations can generate the maximized quality information. Moreover, competitive
pressure does not influences managerial performance and business value enhancement.

6. CONCLUSION
To enhance firm value among the increasing of global competition, companies need the
sustenance information to support their strategic positioning and managerial decision making.
Management accounting information system is the powerful solution to solve these
requirements (Davenport, 1998). This study investigated the relationship between MAIS
effectiveness and business value creation of Thai listed firms by using OLS regression
analysis. The results indicate that there are the positive relationship between MAIS
effectiveness and business value creation via the mediating effects of information quality and
managerial performance. The greater MAIS effectiveness will lead to greater information
quality and managerial performance, therefore, driving to the maximization of business value
power creation power. In addition, this study operated IT intensity as the moderator of MAIS
effectiveness-information quality relationship as well as MAIS effectiveness-managerial
performance relationship. The results showed that the association of IT intensity and MAIS
effectiveness does not affect information quality but influence managerial performance.
Furthermore, this study also examined the effects of the association between competitive
pressure and information quality as well as managerial performance. In the situation with
competitive pressure, firms that have powerful information quality and managerial
performance may not distress from this situation.

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AUTHOR PROFILE:

Khajit Konthong graduated from Chulalongkorn University on April 2004. He earned his
degree in Master of Science in Information Technology in Business concentrating on
Accounting Information System. Currently, he is a Ph.D. student in Accounting at Faculty of
Accountancy and Management, Mahasarakham University, Thailand.

Dr.Phapruke Ussahawanitchakit earned his Ph.D. at Washington State University since

2002. Currently, he is a professor of accounting, a dean and a director of graduate studies at
Faculty of Accountancy and Management, Mahasarakham University, Thailand.

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