The Moderating Effect of Managers’ Ability on the Relationship between Cost-System Functionality and Financial Performance

Evidence from Social Welfare Corporations in Japan

Abstract

The purpose of this study is to investigate the relationship between cost-system functionality and financial performance of organizations. Particular emphasis is placed on the moderating role of mangers’ management ability in deriving the financial performance benefits correlated with the functionality of costing systems. Based on data from 160 social welfare corporations, we find that the relationship between cost-system functionality and financial performance is partially moderated by the management ability. Thus, this study contributes to literatures of cost-system design by providing insights into the moderating effect of managers’ management ability on cost-system functionality and financial performance.