Management Control

URL study guide

https://studiegids.vu.nl/en/courses/2024-2025/E_PTACC_MC

Course Objective

This course provides in-depth knowledge that relates to how firms create the conditions to achieve predetermined or desirable outcomes . It allows students by means of a textbook, cases and academic papers to consider a wide range of control mechanisms that can be used to achieve this purpose of achieving organizational objectives, ranging from formal information-based mechanisms to more informal personnel and social control mechanisms (Bridging theory and practice
- knowledge). Students share their thoughts on application and use of controls by presenting cases and paper reviews and lead classroom discussions (Bridging theory and knowledge
- application; Professional social skills), balancing pros and cons
- also from an ethical point of view, to express their suggestions on the application of controls in practice (Broadening your horizon
- responsibility). After following this course, you will be familiar with: - Acquiring a thorough understanding of the components of MCS, their effects on human behavior, their interrelationships and design criteria. - Active learning using the case method, in which the analysis of actual events of companies stimulates learning, and identification and application of relevant knowledge to complex problems. - Developing skills to critically evaluate how empirical (accounting) research and its outcomes contribute to a theoretical understanding of the field and to implications for practice. - Further development of competencies in presenting and discussing business analyses and academic papers.

Course Content

The contents of this course can broadly be divided into two sections. The first section deals with the control function of management and management control system design. This section includes topics such as the cause of control problems and the need for management control systems (MCS) in organizations, management control alternatives and their effects on behavior, and the determinants of MCS design. This part of the course will build mainly on the book by Merchant and van der Stede as referred to below, and case presentations and discussions. The second section of the course uses these insights from part I to study MCS in its organizational context using empirical research that focuses on planning and target setting, performance measurement and evaluation, and incentive compensation. In analyzing these elements of the control function, contemporary empirical accounting and management research is examined by critically studying, presenting and reporting on articles from the accounting literature. This section therefore also builds on both theory insight from part I and skills in research methods acquired earlier during the economics and business administration curriculum. In addition, the second section of the course includes a series of guest lectures that bring these topics into a real-life context.

Teaching Methods

Class in a group of ca. 40 students, on campus.

Method of Assessment

Case reports (2
- 7.5% of final grade) Presentation (case or paper review – 7.5% of final grade) Paper review (7.5% of final grade) Written exam (70% of final grade) Optional assignment yielding a maximum of 1 full point on top of final grade.

Literature

- Merchant, K.A. & Van der Stede, W.A. (2017). Management Control Systems: Performance Measurement, Evaluation and Incentives, Harlow, United Kingdom: Prentice Hall, 5th Edition. - Selected articles for review, presentation and discussion (to be announced in the course manual).

Additional Information

In enrolling for the course, please take note of the fact that presentation, cases and paper reviews are subject to team work (of max 3 students, to be formed during the first lecture). This means that once starting this course, you must finish it!

Recommended background knowledge

The course assumes basic knowledge of common economic theories (e.g., transaction cost economics, agency theory) and accounting knowledge (e.g., cost behavior, investment decisions).