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Impact of Activity-Based Costing on Financial Performance in the Czech Republic

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  • Jana Pokorná

    (Department of Corporate Economy, Faculty of Economics and Administration, Masaryk University, Žerotínovo nám. 617/9, 601 77 Brno, Czech Republic)

Abstract

Looking for factors affecting business performance is one of a central concern of business economists for several years. Activity-Based Costing (ABC) is a management tool that provides additional and more accurate information on the costs and company performance, thus contributes to better manager decision making, and thus has potential to affect the financial performance. This paper aims to investigate the link between the use of ABC among corporations in the Czech Republic and improvement in corporate financial performance.The empirical survey was carried out among 548 Czech medium-sized and large companies from various economic sectors. Financial performance was measured by standardized Return on Assets from 2005 to 2011.The ABC expansion among enterprises in the Czech Republic is currently comparable with neighbouring countries, although the extent of its use is lower. Surprising but statistically significant results show that businesses that use ABC have on average the same or even lower financial performance than businesses without ABC.

Suggested Citation

  • Jana Pokorná, 2016. "Impact of Activity-Based Costing on Financial Performance in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(2), pages 643-652.
    • Handle: RePEc:mup:actaun:actaun_2016064020643
    DOI: 10.11118/actaun201664020643
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    References listed on IDEAS

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    1. Gosselin, Maurice, 1997. "The effect of strategy and organizational structure on the adoption and implementation of activity-based costing," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 105-122, February.
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    4. Malmi, Teemu, 1999. "Activity-based costing diffusion across organizations: an exploratory empirical analysis of Finnish firms," Accounting, Organizations and Society, Elsevier, vol. 24(8), pages 649-672, November.
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