The rise and fall of management accounting systems: A case study investigation of EVA™

This paper uses institutional theory as a framework for explaining and understanding the processes involved in the creation, use and decline of comprehensive Economic Value Added™ (EVA) based management accounting systems (MASs) in three substantial New Zealand companies. Longitudinal case studies, each extending to more than a decade through the recent financial crisis, were conducted. Qualitative data from interviews was combined with the investigation of the initial EVA philosophy, technical design (and subsequent evolution thereto) of the firms' new MASs. The result is a study which highlights and emphasises the socio-technical nature of management accounting practice. The interface between the technical accounting issues and the circumstances, beliefs and experiences of participants led to the introduction of extensive EVA-based systems, followed by significant adjustment of them and finally to their eventual abandonment. Thus, the analysis shows that, to fully understand the process of institutionalisation of management accounting, the technical characteristics of change should not be neglected but should be integrated in analysis undertaken. The factors involved in the de-institutionalisation of the above changes are also explored and presented.