Recent management accounting research has revealed that costs increase in response to the increase in sales, but costs do not decline proportionately with decrease in sales. This phenomenon is named “sticky costs”. Costs stickiness is considered to be a result of deliberate decision by managers. When managers facing decline in sales consider that sales temporally decrease and expect that sales increase in near future, they would deliberately retain organizational resources. According to this hypothesis, it can be considered that sales forecasts affect profits through the cost of retaining extra resources. This paper examines the hypothetical relationship among sales forecasts, the change of cost level under the certain sales forecasts and profit. When managers have optimistic sales forecasts, that is, forecasted sales are larger than reported sales, companies cannot earn enough profit from the future sales recovery because of the cost of retaining too much resources. This paper provides an empirical evidence of the importance of sales forecasts that affect the profit via change of cost.

We investigate the relative and increment information content of taxable income in Japan. Extant research in U.S. shows that book income exhibits significantly greater relative explanatory power, while both income exhibit significant incremental explanatory power (i.e., taxable income also exhibit explanatory power). The focus of our research is how the information content of taxable income in Japan is changed on the tax reform act of 1998, using taxable income data which is publicly available rather than estimated amount. First, we find that taxable income exhibits significantly greater relative explanatory power after the tax reform act of 1998 while book income exhibits significantly greater relative explanatory power before 1998. In addition, taxable income exhibits significant incremental explanatory power in 9 of the 13 years and in all years after 1998. Second, we find that for firm-years with large book-tax differences (BTD), the incremental explanatory power of taxable income enhances after the tax reform act of 1998. Third, our results suggest that low earnings quality have distinct effects on the information content of taxable income. These findings are relevant to recent research examining book-tax differences as a measure of earnings quality and taxable income as a complementary performance measure, as well as the recent debate on book-tax conformity.

M&A effect on performance has been analyzed mainly on the stock return perspective or static financial basis of company size and industry. This paper focuses on the internal capital market efficiency, employed to evaluate diversified companies, and clarifies M&A effect on financial performance from the dynamic basis. Through the analysis on internal capital and financial performance change aroused by M&A we have found that financial performance declines as internal capital market efficiency declines on M&A. We have also found internal capital market efficiency declines as diversification extent increases. Moreover we have found M&A increases diversification extent, decreases internal capital market efficiency, and declines financial performance.

The purpose of this paper is to investigate functions and the design of product costing in factories by empirical method. Although product costing still occupies the large proportion of the education, management accounting researchers have not analyzed this area so much. Then, this paper explores various elements of product costing, using not normative methodology but positive and empirical methodology. Analyzed by exploratory factor analysis, we found five functions of product costing. And these functions and some contingencies effect significantly on the scope of product cost, the selection of process or job costing, and the selection of who to be reported.

The purpose of this paper is to better understand the process of management accounting change in individual entities. In this paper, the superiority of the evolutionary approach is examined by empirical data which is a case in Murata Manufacturing Company, Ltd. The theoretical framework is also inspired from that of conventional historical studies which are characterized by socio-economic or efficiency-based analysis, and distinguishing two aspects of management accounting techniques. Based on the approach, I describe functional shift of management accounting techniques in ‘Matrix Management’. And the organizational natures of change, for example, path-dependence is also observed. From this analysis, the paper concludes with some directions for possible future research.