Managerial Judgement and Strategic Investment

This book presents the findings from a cross-sectional survey funded by CIMA. The project aimed to survey senior management accountants working across a range of organisations and industries with a unique focus on the behavioural side of decision making, the use of managerial judgement. Previous capital budgeting surveys have tended to focus on the quantitative evaluation tools and techniques used for project appraisal. This study was broader in that it asked about every stage of the strategic investment decision (SID) process, from initiation to post implementation review, and how different managers were involved at different stages of the process. The focus is on how decision judgements are reached. . This book reflects the widespread support for an emerging model of the strategic investment decision process, involving accountants and other managers in up to ten stages . With a much broader focus than existing literature, the report covers all stages of strategic investment decision (SID) process, the types of SID and how multiple managers participate in the process . The research explores the role that managerial judgement plays in the SID process including insight on how human behaviour might influence decisions and how managerial judgement might be exercised. . Findings from this publication may assist organisations in benchmarking their own SID practice.

Professor Elaine P. Harris is Professor and Head of Department of Accounting and Finance and Head of Leicester Business School's Graduate Centre at De Montfort University. She was Chair of the Committee of Heads of Accounting (CHA) (2005-2009). Professor Clive R. Emmanuel is Professor of Accounting and Finance at the University of Glasgow. He is currently joint editor of the British Accounting Review. His research interests are in management control, transfer pricing, and capital budgeting. Samuel Komakech is Lecturer in Accounting and Finance at De Montfort University and worked as the research assistant on this CIMA-funded project, while studying for his PhD.

About the Authors	p. vii
Acknowledgements	p. ix
List of Figures and Tables	p. xi
Executive Summary	p. xiii
Introduction	p. xix
Strategic Investment Decisions	p. 1
Introduction	p. 1
Context	p. 1
Stages in the SID process	p. 3
Types of SID	p. 6
Multiple manager participation in the process	p. 6
The role of managerial judgement in SIDs	p. 7
Summary	p. 8
Managerial Judgement	p. 9
Introduction	p. 9
Managers' strategic cognition and psychological concepts	p. 9
Heuristics	p. 10
Framing of propositions	p. 12
Collective decision-making and group processes	p. 13
Consensus	p. 14
Summary	p. 14
Survey Design	p. 17
Introduction	p. 17
The analytic survey questionnaire	p. 17
The sample and distribution of the questionnaire	p. 21
Respondents	p. 25
Data analysis	p. 25
Summary	p. 26
Survey Analysis	p. 27
Introduction	p. 27
Respondent profiles	p. 27
Types of projects	p. 28
Stages in the SID process	p. 29
Nature of the SID process	p. 31
Managerial involvement	p. 32
Psychological and group processes	p. 36
Summary	p. 40
Summary of Research Findings and Implications	p. 41
Summary of main findings	p. 41
Implications for management accounting literature	p. 44
Implications for management accountants	p. 44
Implications for management of organisations	p. 45
Implications for stakeholders	p. 46
References	p. 49
Questionnaire	p. 53
Summary of Survey Responses	p. 67
Further Statistical Tables: For Questions Using Likert Scales	p. 83
Case Analysis	p. 91
Index	p. 105
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Managerial Judgement and Strategic Investment Decisions: A Cross-sectional Survey

Summary

Author Biography

Table of Contents

Supplemental Materials