Effects of CFO Characteristics on the Use of Management Control Systems - An Upper Echelons Perspective

Abstract

Recent management control research suggests that managerial characteristics influence the design and use of management control systems (MCS). This study draws on upper echelons theory and Simons’ levers of control framework to examine how CFO characteristics affect the use of MCS. Our findings suggest that both gender and business education of the CFO are significant determinants of MCS use. The analysis is based on a unique dataset which consists of questionnaire responses from 240 CFOs of large Swedish companies and archival data. Regression analysis is used to test our five hypotheses related to gender, business education and marital status, of which we find support for three out of five. Specifically, the results suggest that female CFOs are positively associated with interactive use of MCS and that CFOs with more business education use MCS more interactively as well as diagnostically. Our empirical evidence provides further support for the relevance of upper echelons theory and extends earlier work on the use of MCS. More specifically, the study is to our knowledge the first to examine how CFO characteristics affect the use of MCS and how managerial characteristics affect the use of MCS with a cross-industrial sample.