The Effect of Management Plans on Firm Performance

Abstract

The purpose of this paper is to investigate the usefulness of management plans. Recently, management plans have been regarded as a basic component of management control systems. This is suggested by the fact that many textbooks of management accounting, we have reviewed, refer to management plans. However, there is little empirical evidence on the usefulness of management plans as a component of management control systems. So that, some description about management plans lacks consistency between textbooks. Then in this paper we explore the relations between the elements of management plans and firm performance. As a result, it appears that the purpose of planning and the method of updating have significant relations to return on assets (ROA) which is a measure for evaluating appropriateness of resource allocation.