Open AccessControl-Oriented Inventory Production and Sales Activities in Chinese Manufacturing Firms
Author(s) -
Haihong He
Publication year - 2018
Publication title -
accounting and finance research
Language(s) - English
Resource type - Journals
eISSN - 1927-5994
pISSN - 1927-5986
DOI - 10.5430/afr.v7n2p134
Subject(s) - business , production (economics) , control (management) , china , sales management , sample (material) , period (music) , marketing , economics , microeconomics , chemistry , physics , management , chromatography , political science , acoustics , law
This study uses a sample of Chinese manufacturing firms to examine the association between current period inventory production costs and sales changes in adjacent past and future periods. The results find an overall significant association between inventory production and the past period sales changes, but no association between inventory production and the future period sales changes. Further, we find that in firms with high return on assets, inventory production is only associated with the past period sales changes, but not with the future period sales changes; in contrast, in firms with low return on assets, inventory production is only associated with the future period sales changes, but not with the past period sales changes. The results, on one hand confirm our perception of control oriented management accounting practices in China, on the other hand suggest that firm performance is associated with such management emphasis in China.