MAF Summer 2019

Management Accounting Frontiers

MAF Overview



Editorial: Only a Three-Legged Stool? A Review of the Concept of Alignment in the Economics of Performance Management

By G. Sriharana, Michael S. C. Tseb

aUniversity of Adelaide, Australia

bHolmes Institute, Australia


This editorial revisit the concept of alignment within the agency theoretic view of organisational performance management. Based on an analysis of a real-life case, we examine how far the theoretical reasoning based on the concept of ‘three-legged stool’ is practically relevant. Findings of our case suggests that while there is seemingly misalignment among the three established structures of performance evaluation, decision right allocation and incentive compensation, the ‘misalignment’ is ‘repaired’ with the support of two other governance structures namely, HR and CRM policies. We believe that the design of performance management is not to be confined to the ‘three-legged stool’ but practically extended to other forms of governance structures.

Keywords: Agency Theory; Alignment; Decision Right Allocation; Evaluation; Performance Management; Incentive Compensation

Download: MAF Vol. 2 – Editorial


Using Fund Transfer Pricing as a Performance Measurement System in the Financial Service Industry

By Vincent Bicudo de Castroa, Tiago Leoteb, Maryam Safaric

aDeakin Business School, Australia

bIBMEC Business School, Brazil

cRMIT University, Australia


As a response to the financial crisis of 2007-2008, financial service industry regulators have commonly requested financial service industry to implement fund transfer pricing (FTP) mechanisms. Despite the importance of the topic as highlighted in the practitioners’ literature since the 2000s, the use of FTP as a performance measurement system has been understudied. To add to our understanding of such mechanisms in the financial service industry, this paper demonstrates, through an analytical model, how FTP can be used as a performance measurement system in financial institutions. More importantly, this paper illustrates how FTP can be used for overcoming the distortions caused due to the transfer of funds between the business units.

Keywords: Management Accounting; Performance Measures; Transfer Pricing

Download: MAF Vol. 2 – Bicudo de Castro


Carbonvestments: Appraising Investments in a Carbonomics Environment

By Janek Ratnatungaa, Chris D’Souzab

aCalwest University, USA

bInstitute of Certified Management Accountants, Australia


In 2011, Australia introduced a Carbon Pollution Reduction Scheme (or CPRS) that was a cap-and-trade emissions trading scheme for anthropogenic greenhouse gases. It clearly indicated to companies that polluting the environment with carbon emissions will no longer be free. Companies subject to carbon caps under a carbon trading scheme can either invests in carbon sequestration project and or buy carbon credits to offset their carbon liabilities. While Net Present Value (NPV) has been recorded as the most popular appraisal technique used across the globe for project valuation purposes, finance theorist suggests that using real options (RO) analysis is a more superior techniques to value investment opportunities. Using case study data of an early mover in a CPRS scheme, this paper reveals how RO approach provides more strategic insights than traditional NPV in valuing carbon sequestration investments (termed carbonvestments).

Keywords: Carbon Emissions; Carbonomics; Net Present Value; Project Valuation; Real Options Analysis

Download: MAF Vol. 2 – Ratnatunga & D’Souza