Modeling Management Accounting and Control in the Integration Processes of Mergers & Acquisitions

This thesis is about two areas: namely, mergers and acquisitions (M&As) and management accounting and control systems (MACS). M&As have grown, measured both in numbers and size, in recent decades and have become very popular strategic business tactics to achieve economies of scale and scope. In fact, some believe that they have even exceeded the internal or ‘organic’ growth of organizations. However, approximately two of every three M&As fail to achieve the intended goals which were the stated reasons for the business deal. The explanation given for this high failure rate is often bad integration management. MACS, on the other hand, are important parts of the entire control mechanisms used to motivate, monitor, measure, and sanction the actions of managers and employees in organizations. This function of MACS can also be assumed to be true when it comes to organizations involved in M&As. The main purpose of this study is to bring these two research areas together by developing a model that shows the important variables and how they determine MACS’ involvement in M&A integration processes. The main motivation for this thesis is the recognized lack of such studies which are oriented towards both research areas although there are many ‘implicit’ studies that deal with the issues involved. The aim is therefore to collect the few explicit and the many implicit studies’ content and build a model that can be used for further research. Hence, the method used is the collection, study and analysis of the relevant literature in the two research fields in order to generate variables that explain MACS involvement in M&A integration processes. The results show that the role and function of MACS in M&A integration processes can be interpreted in many different ways, above all depending on which perspective/view is used. The research area under investigation can furthermore be recognized in the context of different dimensions, namely a socio-cultural one, a political-ideological one, and a technical one. The perspectives used and the dimensions through which MACS are put into context determine to a large extent how their role and function are described. These fairly theoretical and research dependent variables also have an impact on how more pragmatic variables are described. Four such main groups of pragmatic variables are defined in the thesis. The group that is at the most macro-level here is the group containing attributes and characteristics of the two organizations involved (size, age, structure, strategy, environment, culture, management style, and performance). The second group, at a somewhat lower level, contains the specific organizational M&A attributes and characteristics (M&A motives, goals, and expectations, the different M&A types, integration levels, and the planning, executing, and timing of the M&A integration process). The third group, however, includes variables that are attributable particularly to the MACS of the involved organizations. Hence, this group contains variables such as the type of the systems used, the users’ (accountants and managers) role and skill, system technology, and financial accounting topics as well as internal accounting plans. The fourth group finally is at the lowest level of this analysis since it is almost identical with the variables under investigation. Consequently, this group, named MACS integration management variables, includes factors such as planning and executing of MACS’ integration processes, the integration logic in general, but also peoples’ reaction to MACS changes. Finally, the MACS involvement in M&A integration processes is illustrated