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Purpose-The purpose of this paper is to investigate factors that affect the use of management accounting practices (MAPs) in Malaysian medium-sized firms in manufacturing sector. Design/methodology/approach-A quantitative research design involving the use of postal questionnaire was carried out to investigate the influences of key contingent factors on MAPs. The survey was conducted to 500 Malaysian medium-sized firms in manufacturing sector which elicited 110 useable responses. Findings-The results indicates that size of the firm, intensity of market competition, commitment of owner/manager of firm and advanced manufacturing technology have significant influences on the use of certain MAPs. Thus the research provides support for a contingency-based explanation for the use of MAPs and identifies new variable such as commitment of owner/manager as one of a key factor that affect the extent of use of MAPs in smaller firms. Research limitations/implications-The research focused on medium-sized firms in manufacturing sector. Therefore the empirical research results may lack generalizability to the overall Malaysian small and medium-sized enterprises (SMEs). Future study might investigate whether there is a variation of the significant contingent factors in medium-sized firms across economies. Practical implications-This research fills in the significant research gap and provides a start for further research into MAPs among SMEs based on a contingency approach. Social implications-The results contribute to a better understanding of the factors underlying the development of MAPs among smaller firms. Originality/value-The paper discusses key contingency factors influencing MAPs in larger firms and SMEs and how these factors could affect the use of MAPs in smaller firms' context.

This paper provides empirical evidence on the adoption of a broad range of management accounting practices in Malaysian small and medium-sized enterprises (SMEs) in the manufacturing sector. Data collected from a postal survey of 160 accountant managers are used to facilitate the study. The results indicate that the traditional MAPs such as conventional budgeting, traditional costing and financial performance measures are widely used by the respondents. The results also show that a significant number of respondents have adopted one or more measures both financial and non-financial but the reliance on financial measures is greater than for non-financial measures. The main non-financial measures frequently used by respondents are on-time delivery, number of customer complaints, defect rate and manufacturing lead time. These findings suggest that respondents, who use non-financial performance measures, are more internal-process and customer focused rather than employee focused. Further the recently developed management accounting techniques such as ABC, non-financial performance measures particularly on employees-oriented measures, decision support analysis and strategic management accounting are only adopted by the minority of the respondents. The respondents also indicated a low extent of use of all investment appraisal techniques in their decision making process. The finding suggests that given the relatively small size of the responding firms and due to some constraints, it is unlikely for the SMEs to adopt a comprehensive MAP in their firms.

PurposeThe purpose of this study is to examine the relationships between leverage and firm’s performance in Malaysia by framing the relationship under the tradeoff theory and agency cost theory.Design/methodology/approachBased on insights drawn from the existing literature, we opted for fixed effects and system two-steps GMM models to establish the hypothesized relationship between leverage and performance. We analyzed 528 nonfinancial firms listed on the Bursa Malaysia Stock exchange for the period of 12 years (2005–2016).FindingsThe outcomes show that the leverage ratio improves the firm performance, consistent with leverage serving as an effective strategy in constraining managers from building their personal empire, revealing a proportionately greater benefit for Malaysian firms than the cost to debt financing. The authors also find that a positive relationship between leverage and firm performance switch to the negative when the level of leverage reaches beyond the optimal level. Consequently, switching from positive to negative indicates that debt has a twofold (nonlinear) impact on firm performance.Practical implicationsOur research provides several implications to potential stakeholders. For investors, firms having lower leverage ratios could achieve superior performance, thus investing in corporations pursuing higher performance. Managers should therefore strive for achieving higher performance to meet the needs of investors and shareholders. From the researcher’s perspective, our research suggests the need to go away from the searching linear association between leverage and firm performance and the relevance of nonlinear correlation. Moreover, our research can help managers to understand how their lender relates to their debt to assets ratios. Thus, they can design an optimal level of leverage that not only improves the firm’s performance but also reduce the associated costs.Originality/valueTo the best of the author’s knowledge, this is the initial attempt in the context of Malaysia that documents evidence indicating that the lower leverage is likely to create value for shareholders while a higher debt ratio reduces firm profitability.

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