Clicca qui per scaricare

Management accounting systems in venture capital-backed start-up companies
Titolo Rivista: MANAGEMENT CONTROL 
Autori/Curatori: Simone Aresu, Luigi Rombi, Andrea Cardia 
Anno di pubblicazione:  2019 Fascicolo: Lingua: Inglese 
Numero pagine:  24 P. 35-58 Dimensione file:  294 KB
DOI:  10.3280/MACO2019-003003
Il DOI è il codice a barre della proprietà intellettuale: per saperne di più:  clicca qui   qui 


Management Accounting Systems (MAS) can help start-up companies to manage resource allocation and satisfy investors’ information needs. This study helps to investigate the main features of MAS adopted by Italian venture capital-backed start-up companies. Also, the study aims to analyse how venture capitalists monitor their investment through management accounting. Thirty semi-structured interviews were carried out to gather information from a corporate and an investor perspective. Our results show that both start-up companies and investors consider MAS as useful to make conscious and target-oriented decisions. MAS are used by investors to monitor the investee’s performance and contribute in aligning goals’ time horizon. In addition, MAS help investors to develop a cooperative relationship with start-up companies and to provide business advices. This study contributes to the agency-theory debate by showing that MAS help not only to reduce information asymmetries but also to foster a dialogue and to benefit from investors’ human capital.


Keywords: Agency theory, information asymmetry, management accounting systems, start-up, venture capital

  1. Amabile T.M., Conti R., Coon H., Lazenby J., Herron M. (1996), Assessing the Work Environment for Creativity Teresa, The Academy of Management Journal, 39(5), 1154-1184., 10.2307/256995DOI: 10.2307/256995
  2. Amit R., Brander J., Zott C. (1998), Why do venture capital firms exist? Theory and canadian evidence, Journal of Business Venturing, 13(6), 441-466., 10.1016/S0883-9026(97)00061-XDOI: 10.1016/S0883-9026(97)00061-X
  3. Anthony R., Hawkins D., Merchant K.A. (2010), Accounting: Texts and Cases. McGraw-Hill Education-Europe.
  4. Arcari A., Pistoni A., Moretto E., Ossola P. (2016), How Italian companies are monitoring innovation, Management Control, 2, 143-165., 10.3280/MACO2016-002007DOI: 10.3280/MACO2016-002007
  5. Arthurs J. D., Busenitz L.W. (2003), The Boundaries and Limitations of Agency Theory and Stewardship Theory in the Venture Capitalist/Entrepreneur Relationship, Entrepreneurship Theory and Practice, 28(2), 145-162.
  6. Aureli S., Cardoni A., Del Baldo M., Lombardi R. (2019), Traditional management accounting tools in SMEs ’ network . Do they foster partner dia logue and business innovation ?, Management Control, 1, 35-50., 10.3280/MACO2019-SU1003DOI: 10.3280/MACO2019-SU1003
  7. Baiman S. (1982), Agency theory in managerial accounting: A survey, Journal of Accounting Literature, 1, 154-213,, 10.1016/0361-3682(90)90023-NDOI: 10.1016/0361-3682(90)90023-N
  8. Barker R., Hendry J., Roberts J., Sanderson P. (2012), Can company-fund manager meetings convey informational benefits? Exploring the rationalisation of equity investment decision making by UK fund managers, Accounting, Organizations and Society, 37(4), 207-222.
  9. Bertoni F., Colombo M. G., Croce A., Piva E. (2007), A review of the venture capital industry in Italy, in G. N. Gregoriou, M. Kooli, and R. Kraeussl (Eds.), Venture Capital in Europe (pp. 129-141). Butterworth-Heinemann.
  10. Bhidé A. (2000), The origin and evolution of new businesses. Oxford, Oxford University Press.
  11. Bisbe J., Otley D. (2004), The effects of the interactive use of management control systems on product innovation, Accounting, Organizations and Society, 29(8), 709-737., 10.1016/J.AOS.2003.10.010DOI: 10.1016/J.AOS.2003.10.010
  12. Bonini S., Alkan S., Salvi A. (2012), The effects of venture capitalists on the governance of firms, Corporate Governance: An International Review, 20(1), 21-45.
  13. Boyer T., Blazy R. (2014), Born to be alive? The survival of innovative and non-innovative French micro-start-ups, Small Business Economics, 42(4), 669-683.
  14. Brinckmann J., Salomo S., Gemuenden H. G. (2011), Financial Management Competence of Founding Teams and Growth of New Technology-Based Firms, Entrepreneurship: Theory and Practice, 35(2), 217-243.
  15. Brusa L. (2012), Sistemi manageriali di programmazione e controllo. Milano, Giuffè.
  16. Busco C., Riccaboni A., Scapens R. W. (2006), Trust for accounting and accounting for trust, Management Accounting Research, 17(1), 11-41.
  17. Caselli S., Negri G. (2018), Private Equity and Venture Capital in Europe-markets, techniques and deals. London, Elsevier.
  18. Cassar G. (2009), Financial statement and projection preparation in start-up ventures, Accounting Review, 84(1), 27-51.
  19. Cassar G. (2010), Are individuals entering self-employment overly optimistic? An empirical test of plans and projections on nascent entrepreneur expectations, Strategic Management Journal, 31(8), 822-840.
  20. Cassar G., Ittner C. D. (2009), Initial retention of external accountants in startup ventures, European Accounting Review, 18(2), 313-340., 10.1080/09638180902731562DOI: 10.1080/09638180902731562
  21. Chenhall R. H. (2003), Management control systems design within its organizational context: Findings from contingency-based research and directions for the future, Accounting, Organizations and Society, 28(2-3), 127-168., 10.1016/S0361-3682(01)00027-7DOI: 10.1016/S0361-3682(01)00027-7
  22. Chenhall R. H., Moers F. (2015), The role of innovation in the evolution of management accounting and its integration into management control, Accounting, Organizations and Society, 47, 1-13., 10.1016/J.AOS.2015.10.002DOI: 10.1016/J.AOS.2015.10.002
  23. Christensen E., Wuebker R., Wüstenhagen R. (2009), Of acting principals and principal agents : goal incongruence in the venture capitalist-entrepreneur relationship, Int. J. Entrepreneurship and Small Business, 7(3), 367-388., 10.1504/IJESB.2009.023025DOI: 10.1504/IJESB.2009.023025
  24. Cremades A. (2018), How To Write A Powerful Investor Update, Forbes. -- Retrieved from https://www.forbes.com/sites/alejandrocremades/2018/08/28/how-to-write-a-powerful-investor-update/#27fa474b5a12.
  25. Croce A., Grilli L., Murtinu S. (2019), Why do entrepreneurs refuse venture capital?, Industry and Innovation, 26(6), 619-642., 10.1080/13662716.2018.1495063DOI: 10.1080/13662716.2018.1495063
  26. Cumming D., Dai N. (2013), Why do entrepreneurs switch lead venture capitalists?, Entrepreneurship: Theory and Practice, 37(5), 999-1017.
  27. Davila A. (2005), An exploratory study on the emergence of management control systems: Formalizing human resources in small growing firms, Accounting, Organizations and Society, 30(3), 223-248.
  28. Davila A., Foster G. (2005), Management Accounting Systems Adoption Decisions : Evidence and Performance Implications from Startup Companies, The Accounting Review, 80(4), 1039-1068.
  29. Davila A., Foster G. (2007), Management control systems in early-stage startup companies, The Accounting Review, 82(4), 907-937.
  30. Davila A., Foster G. (2009), The Adoption and Evolution of Management Control Systems in Entrepreneurial Companies: Evidence and a Promising Future, in C. S. Chapman, A. G. Hopwood, and M. D. Shields (Eds.), Handbook of Management Accounting Research (Vol. 3, pp. 1323-1336). Elsevier.
  31. Davila A., Foster G., Jia N. (2010), Building Sustainable High-Growth Startup Companies: Management Systems as an Accelerator, California Management Review, 52(3), 79-105.
  32. Davila A., Foster G., Jia N. (2015), The Valuation of Management Control Systems in Start-Up Companies: International Field-Based Evidence, European Accounting Review, 24(2), 207-239., 10.1080/09638180.2014.965720DOI: 10.1080/09638180.2014.965720
  33. Davila A., Foster G., Li M. (2009), Reasons for management control systems adoption: Insights from product development systems choice by early-stage entrepreneurial companies, Accounting, Organizations and Society, 34(3-4), 322-347.
  34. Dealroom.co (2018), Annual European Venture Capital Report.
  35. Downey S. A. (2018), The real reasons why a VC passed on your startup. -- Retrieved from Entrepreneur’s Handbook website: https://entrepreneurshandbook.co/the-real-reasons-why-a-vc-passed-on-your-startup-917c30103ecb.
  36. Drover W., Wood M. S., Payne G. T. (2014), The Effects of Perceived Control on Venture Capitalist Investment Decisions: A Configurational Perspective, Entrepreneurship: Theory and Practice, 38(4), 833-861.
  37. Dunk A. S. (2011), Product innovation, budgetary control, and the financial performance of firms, The British Accounting Review, 43(2), 102-111., 10.1016/J.BAR.2011.02.004DOI: 10.1016/J.BAR.2011.02.004
  38. Eisenhardt M. (1989), Agency Theory : and Assessment Review, The Academy of Management Review, 14(1), 57-74., 10.2307/258191DOI: 10.2307/258191
  39. Falik Y., Lahti T., Keinonen H. (2016), Does startup experience matter? Venture capital selection criteria among Israeli entrepreneurs, Venture Capital, 18(2), 149-174., 10.1080/13691066.2016.1164109DOI: 10.1080/13691066.2016.1164109
  40. Freeman J., Engel J. S. (2012), Models of Innovation: Startups and Mature Corporations, California Management Review, 50(1), 94-119., 10.2307/41166418DOI: 10.2307/41166418
  41. Gabrielsson J., Huse M. (2002), The venture capitalist and the board of directors in SMEs: Roles and processes, Venture Capital, 4(2), 125-146.
  42. Gervasoni A., Bollazzi F., Bosio A.O. (2018), The Role of Venture Capital in Supporting the Development Process of Innovative Start-Ups: Evidence From the Italian Market, Management Studies, 6(6), 484-501., 10.17265/2328-2185/2018.06.006DOI: 10.17265/2328-2185/2018.06.006
  43. Gompers P. (1995), Optimal Investment, Monitoring, and the Staging of Venture Capital, The Journal of Finance, 50(5), 1461-1489.
  44. Gompers P., Gornall W., Kaplan S.N., Strebulaev I. A. (2016), How Do Venture Capitalists Make Decisions?. National Bureau of Economic Research.
  45. Gompers P., Lerner J. (1999), The Venture Capital Cycle. Cambridge, Massachusetts, MIT Press.
  46. Granlund M., Taipaleenmäki J. (2005), Management control and controllership in new economy firms - A life cycle perspective, Management Accounting Research, 16(1), 21-57.
  47. Hellmann T., Puri M. (2002), Venture Capital and the Professionalization of Start-Up Firms: Empirical Evidence, The Journal of Finance, 57(1), 169-197., 10.1111/1540-6261.00419DOI: 10.1111/1540-6261.00419
  48. Hillman A.J., Dalziel T. (2003), Boards of Directors and Firm Performance: Integrating Agency and Resource Dependence Perspectives, Academy of Management Review, 28(3), 383-396., 10.5465/AMR.2003.10196729DOI: 10.5465/AMR.2003.10196729
  49. Hope J., Fraser R. (2003), Who needs budgets?, Harvard Business Review, 81(2), 108-115.
  50. Hopp C., Lukas C. (2014), Evaluation frequency and evaluator’s experience: the case of venture capital investment firms and monitoring intensity in stage financing, Journal of Management & Governance, 18(2), 649-674.
  51. Italian Minister of Economic Development (2017), Annual report to Parliament on the implementation and impact of legislation in support of innovative startups and SMEs.
  52. Jensen M. C., Meckling W. H. (1976), Theory of the firm: managerial behavior, agency costs and ownership structure, Journal of Financial Economics, 3, 305-360., 10.1016/0304-405X(76)90026-XDOI: 10.1016/0304-405X(76)90026-X
  53. Karlsson T., Honig B. (2009), Judging a business by its cover: An institutional perspective on new ventures and the business plan, Journal of Business Venturing, 24(1), 27-45.
  54. Knockaert M., Ucbasaran D. (2013), The Service Role of Outside Boards in High Tech Start-ups: A Resource Dependency Perspective, British Journal of Management, 24(1), 69-84.
  55. Leece D., Berry T., Miao J., Sweeting R. (2012), The post-investment relationship between a venture capitalist and its investee companies, International Journal of Entrepreneurial Behaviour and Research, 18(5), 587-602., 10.1108/13552551211253946DOI: 10.1108/13552551211253946
  56. Leotta A. (2011), Il ruolo del controllo nello sviluppo di nuovi prodotti. Inquadramento teorico ed evidenze empiriche, Management Control, 2, 9-38., 10.3280/MACO2011-002002DOI: 10.3280/MACO2011-002002
  57. Lerner J. (1995), Venture Capitalists and the Oversight of Private Firms, The Journal of Finance, 50(1), 301-318.
  58. Mainetti S. (2019), Innovazione in azienda, tre livelli da scalare in sequenza, Il Sole 24 Ore. -- Retrieved from https://www.ilsole24ore.com/art/innovazione-azienda-tre-livelli-scalare-sequenza-ACWLw3E?fromSearch.
  59. Malmi T., Brown D.A. (2008), Management control systems as a package-Opportunities, challenges and research directions, Management Accounting Research, 19(4), 287-300.
  60. Manigart S., De Waele K., Wright M., Robbie K., Desbrières P., Sapienza H., Beekman A. (2000), Venture capitalists, investment appraisal and accounting information: A comparative study of the USA, UK, France, Belgium and Holland, European Financial Management, 6(3), 389-403., 10.1111/1468-036X.00130DOI: 10.1111/1468-036X.00130
  61. Marchini I. (1998), Il governo della piccola impresa, vol. 3 - La gestione delle funzioni. Genova, ASPI/INS-EDIT.
  62. Mariani G., Morelli D., Bartoloni L. (2019), Managing uncertainty in the start-up environment. Is a business plan an incentive or a limitation?, Management Control, 1, 73-94., 10.3280/MACO2019-001004DOI: 10.3280/MACO2019-001004
  63. Massaro M., Moro A., Lucas M. (2012), Approcci formali e informali al controllo negli innovation network . La relazione tra Leve del Controllo e Fattori della Fiducia, Management Control, 1, 27-54., 10.3280/MACO2012-001003DOI: 10.3280/MACO2012-001003
  64. Mengel S., Wouters M. (2015), Financial planning and control in very small start-up companies: antecedents and effects on company performance, International Journal of Entrepreneurship and Small Business, 26(2), 257-277.
  65. Merchant K.A. (1990), The effects of financial controls on data manipulation and management myopia, Accounting, Organizations and Society, 15(4), 297-313., 10.1016/0361-3682(90)90021-LDOI: 10.1016/0361-3682(90)90021-L
  66. Mitchell F., Reid G.C. (2000), Editorial. Problems, challenges and opportunities: the small business as a setting for management accounting research, Management Accounting Research, 11(4), 385-390.
  67. Mitchell F., Reid G.C., Terry N. G. (1997), Venture Capital Supply and Accounting Information System Development, Entrepreneurship, Theory and Practice, 21(4), 45-62,, 10.1177/104225879702100404DOI: 10.1177/104225879702100404
  68. Nicolò D. (2018), Carenze informative e vulnerabilità delle imprese giovani: il ruolo del business plan, Management Control, 2, 37-52.
  69. Nofsinger J.R., Wang W. (2011), Determinants of start-up firm external financing worldwide, Journal of Banking and Finance, 35(9), 2282-2294.
  70. Nuscheler D., Engelen A., Zahra S.A. (2019), The role of top management teams in transforming technology-based new ventures’ product introductions into growth, Journal of Business Venturing, 34(1), 122-140.
  71. Panda S. (2018), Adequacy of agency theory in explaining the venture capitalist-entrepreneur relationship: a firm life-cycle perspective, International Journal of Entrepreneurship and Small Business, 34(3), 309., 10.1504/IJESB.2018.092745DOI: 10.1504/IJESB.2018.092745
  72. Panda S., Dash S. (2016), Exploring the venture capitalist-entrepreneur relationship: evidence from India, Journal of Small Business and Enterprise Development, 23(1), 64-89., 10.1108/JSBED-05-2013-0071DOI: 10.1108/JSBED-05-2013-0071
  73. Parhankangas A., Ehrlich M. (2014), How entrepreneurs seduce business angels: An impression management approach, Journal of Business Venturing, 29(4), 543-564.
  74. Pfeffer J., Salancik G.R. (2003), The external control of organisations - A resource dependence perspective. Stanford, Stanford University Press.
  75. Piezunka H., Dahlander L. (2015), Distant search, narrow attention: How crowding alters organizations’ filtering of suggestions in crowdsourcing, Academy of Management Journal, 58(3), 856-880.
  76. Qu S.Q., Dumay J.,(2011), The qualitative research interview, Qualitative Research in Accounting & Management, 8(3), 238-264., 10.1108/11766091111162070DOI: 10.1108/11766091111162070
  77. Reid G.C. (1998), Venture capital investment: An agency analysis of practice. London, Routledge.
  78. Rubin H.J., Rubin I.S. (2012), Qualitative Interviewing: The Art of Hearing Data. Thousand Oaks, SAGE.
  79. Sahlman W.A. (1990), The structure and governance of venture-capital organizations, Journal of Financial Economics, 27(2), 473-521., 10.1016/0304-405X(90)90065-8DOI: 10.1016/0304-405X(90)90065-8
  80. Samagaio A., Crespo N.F., Rodrigues R. (2018), Management control systems in high-tech start-ups: An empirical investigation, Journal of Business Research, 89, 351-360.
  81. Sandino T. (2007), Introducing the first management control systems: Evidence from the retail sector, Accounting Review, 82(1), 265-293.
  82. Sapienza H. J., Gupta A. K. (1994), Impact of Agency Risks and Task Uncertainty on Venture Capitalist-CEO Interaction, Academy of Management Journal, 37(6), 1618-1632., 10.5465/256802DOI: 10.5465/256802
  83. Shane S., Cable D. (2003), Network Ties, Reputation, and the Financing of New Ventures, Management Science, 48(3), 364-381.
  84. Shepherd D.A., Zacharakis A. (2001), The venture capitalist-entrepreneur relationship: Control, trust and confidence in co-operative behaviour?, Venture Capital: An International Journal of Entrepreneurial Finance, 3(2), 129-149., 10.1080/13691060110042763DOI: 10.1080/13691060110042763
  85. Silvola H. (2008), Do organizational life-cycle and venture capital investors affect the management control systems used by the firm?, Advances in Accounting, 24(1), 128-138.
  86. Simons R. (1995), Levers of control: How managers use innovative control systems to drive strategic renewal, Boston, Massachusetts, Harvard Business Press.
  87. Smith J.A., (2005), Empirical study of a venture capital relationship, Accounting, Auditing & Accountability Journal, 18(6), 756-783., 10.1108/09513570510627702DOI: 10.1108/09513570510627702
  88. Smith J.A., Cordina R. (2014), The role of accounting in high-technology investments, British Accounting Review, 46(3), 309-322.
  89. Strätling R., Wijbenga F.H., Dietz G. (2011), The impact of contracts on trust in entrepreneur-venture capitalist relationships, International Small Business Journal, 30(8), 811-831., 10.1177/0266242610388822DOI: 10.1177/0266242610388822
  90. Strauss E. R., Nevries P., Weber J. (2013), The development of MCS packages-Balancing constituents’ demands, Journal of Accounting and Organizational Change, 9(2), 155-187., 10.1108/18325911311325942DOI: 10.1108/18325911311325942
  91. Wijbenga F.H., Postma T.J.B.M., Stratling R. (2007), The Influence of the Venture Capitalist’s Governance Activities on the Entrepreneurial Firm’s Control Systems and Performance, Entrepreneurship: Theory and Practice, 31(2), 257-277., 10.4337/9781847208736.00017DOI: 10.4337/9781847208736.00017
  92. Winton A., Yerramilli V. (2008), Entrepreneurial finance: Banks versus venture capital, Journal of Financial Economics, 88(1), 51-79.

Simone Aresu, Luigi Rombi, Andrea Cardia, in "MANAGEMENT CONTROL" 3/2019, pp. 35-58, DOI:10.3280/MACO2019-003003

   

FrancoAngeli è membro della Publishers International Linking Association associazione indipendente e no profit per facilitare l'accesso degli studiosi ai contenuti digitali nelle pubblicazioni professionali e scientifiche