A proposal on

Effectiveness of accounting information as a tool for Management Decision

in Manufacturing Companies in Sylhet, Bangladesh

Course No: BUS-502

Course Title: Advanced Research Method

Submitted To:

Dr. Mohammad Mizenur Rahman Chowdhury

Associate Professor
Department of Business Administration
Shahjalal University of Science and Technology, Sylhet 3114.

Submitted By:

Adiba Rahman Bushra Chowdhury

Reg. No: 2014731036 (BBA reg.)
5th Year 1nd Semester
Department of Business Administration
Shahjalal University of Science and Technology, Sylhet 3114.

Department of Business Administration

Shahjalal University of Science and Technology, Sylhet 3114.
Date of Submission: 17 February 2020
 Effectiveness of accounting information as a Tool for Management
Decision in Manufacturing Companies in Sylhet, Bangladesh

1.0 Background of the Study

Accounting information is the type of information generated by an organization to be used as

a basis or tool for decision making. Availability of information at the right time is paramount
to the success of every business organization and failure to leverage on accounting
information often proof counterproductive towards the achievement of goals in organizations
Accounting information are qualitative and quantitative details in readable and
understandable form to assist various stakeholders. This can as well related to the record
generated from organization’s transactions at the finance and account section to be used as a
tool or resources upon which decisions of the organization are taken towards accomplishment
of set goals and objectives. This information cut across areas like financial information, non-
financial information, managerial information etc.

According to Royaee et al. 2012, accounting can be defined as the process of keeping
adequate record of financial and non-financial transactions made, properly classifying them,
ensuring its detailed evaluation and insightful analysis, and carefully ensuring that its report
to users are timely for possible decision making. It helps to process documents of business
financial performance e.g. payroll, expenditure, other obligations etc. On the other hand,
information is a processed data.

The manufacturing sector which is the main contributor to the industry sector of Bangladesh
has developed exponentially since the introduction of open market economic policies in the
late 1970s. The liberalization o f the economy has contributed to the large scale development
o f the manufacturing sector on account o f the significant investment and participation of the
private sector. Private sector participation which was extremely limited prior to economic
liberalization has grown exponentially on account o f the investment friendly policies
introduced by the Government. Given the increasing contribution of the manufacturing
sector to the GDP of the country, it is important to access the influence o f accounting
information on strategic decision making o f firms operating in the industry. The importance
of accounting information on decision making has been highlighted by a number of studies.
Findings from research conducted by Anderson indicate that analysis of accounting
information is indispensable in decision making, (Royee 2012). Whilst research conducted by
Royaee, A. Salehi and H.S. Aseman concluded that accounting information is the primary
information used by managers in all types of decision making, and are the variables which
have the most application amongst all variables employed in this context (Royaee et al.
2012), For example, an organization cannot make efficient manufacturing related decisions
without relevant accounting information pertaining to equipment and production costs,
marketing personnel need accounting information to determine product pricing, develop
marketing and promotional budgets, etc. Although previous studies have clearly established
the positive correlation between accounting information and decision making from a global
context, there is a little research on the relationship between these two variables in the Sri
Lankan manufacturing sector. This study aims to address this research gap.

1.1 Problem Statement

Findings from previous research indicate that accounting information plays a significant role
in organizational decision-making. However, there is dearth of research on the relationship
between these two variables in the Sri Lankan manufacturing sector. Understanding the
relationship between these two variables is important, as it will enable companies in
Bangladesh manufacturing sector to make more effective decisions, particularly strategic
decisions. This in turn should have a positive impact not only on the manufacturing sector,
but also on the overall economy of Bangladesh, given the significant contribution of this
sector to the countries. GDP. Based on these facts and limiting the scope o f the study, the
problem statement can be presented as “What is the relationship between
accounting information and marketing and manufacturing related strategic decision making in
Sri Lankan manufacturing companies?

1.2 Literature Review

Accounting information is also crucial for decision making as it “brings light order and
control to all comers of an enterprise, ( Schar et al, 1982) .In order for accounting information
to be useful in decision making it needs to intelligible i.e. should be understood by users who
have a fair knowledge o f accounting and business concepts, relevant i.e. enables the user to
understand historic, current and future events, reliable i.e. should be error free and unbiased,
and comparable i.e. the information should be comparable over time and should be relative to
other benchmarks (IASB, 2011.
A critical research issue in the fields of accounting and management decision-making
concerns the fit of the accounting information system (AIS) with the organizational
requirements for information communication and control. An AIS is defined here as a
computer-based system that processes financial information and supports decision tasks in
the context of coordination and control of organizational activities. Prior accounting research
has examined different models of fit between an AIS and an organization’s task technology,
structure, and environment (Chenhall and Morris, 1986; Gordon and Miller, 1976; Gordon
and Narayanan, 1984; Kim, 1988; Macintosh and Daft, 1987; Mia and Chenhall, 1994).
Although these earlier models have provided useful directions for AIS research, they have not
examined specific system design constructs in relation to system effectiveness

However, for accounting information to be useful for management decision, it must meet the
basic requirements of Relevance, Reliability, Comparability, Consistency, etc., and this
information may be in form of accounting ratios which are used in estimating and obtaining
insight knowledge of present state of affairs of an organization as well as predictive
information of business and financial direction of an organization. These ratios provide wide
acceptance across industries as performance indicator. Ratios such as: Profitability, Liquidity
or Short term solvency, Debt or Leverage, Activity or Efficiency, Investment/Potential and
Actual Growth, Gearing or Long term financial stability ratios are widely used to provide
management with inside knowledge of an organization’s strength and weakness, (Wood &
Sangstar, 2012). Accounting information system (AIS) is central to an organisation,
providing valuable data for decision-makers. While many studies look into the impact of
technology fit and corporate governance (CG) on firm performance, (Ahmed et al. 2016).

1.3 Rationale of the Study

Accounting information is extremely important in order to understand the activities and
performance of an organization, regardless o f its size or ownership status, (Benjamin 1978).
Accounting information facilitates decision making as it provides the quantitative data
essential for organizational planning, control and evaluation [ ], Accounting information is
broadly segmented into two categories o f information i.e. information employed by
organizations for control and decision making purposes, and information employed by
organizations which facilitates the decision making process and organizational coordination,
(Krcn, 1992). The primary source of accounting information within an organization is the
accounting unit. Key functions of the accounting unit include the systematic recording,
analysis, interpretation and summarising of accounting information via a system of preparing
source documents and the entry of accounting data into subsidiary records to ledger.
Accounting data is generated through the financial activities of an organization, with source
documents being the tool, which captures these financial transactions in an organization’s
records. Common accounting source documents of an organization include cash receipts,
invoices, cash book, etc.Strategic decision making can be described as the infrequent
decisions made by the top leaders of an organization that critically affect organizational
health and survival” (Eisenhardt, 1992), Strategic decisions are the most critical decisions of
an organization ,(Sikavica, et al. 1994). As these decisions establish the long-term goals,
objectives and direction of the organization, whilst also influencing it policy, structural and
resource position. Ineffective or wrong strategic decision making can result in long term
negative consequences for an organization. This study will conduct with a view to pertaining
the relationship between accounting information and marketing and manufacturing related
strategic decision making of companies operating at Sylhet in Bangladesh manufacturing
sector. Sample for the study consisted of all public and private manufacturing companies in
Bangladesh.
1.4 Research Questions
The main research question what is the relationship between accounting information and
marketing and manufacturing related strategic decision making of Bangladesh, Sylhet region
companies.
The other specific research questions are

1.5 Objectives of the Study

The main objective of this study is to analyse the relationship between accounting
information and marketing and manufacturing related strategic decision making of companies
operating in Bangladesh, specially Sylhet region manufacturing sector.
To achieve the main objectives several specific objectives are
1.6 Methodological Orientation
In order to achieve objectives, quantitative method in particular survey study method as a
quantitative technique and personal interview method used in collecting necessary data. The
unit o f analysis for this study was at company level. Primary data for the study were
collected via a questionnaire survey which was distributed to the Chief Executive Officers or
executive managers of manufacturing companies. The questionnaire was prepared based on
relevant literature pertaining to the subject. Data obtained from the questionnaire has been
analysed using SPSS. Pearson correlation has been used to analyse the relationship between
the dependent and independent variables and to test the hypotheses. Simple statistical tools
such as standard deviation and mean have been used to measure the extent to which
accounting information is used by public quoted manufacturing companies in Bangladesh
Sylhet region strategic decision making.
1.7 Expected Outcome
The activities will conduct to prepare the report properly are summarized below with a
specific timeframe. Best effort will provided to make the report fruitful by considering the
following activities:

Description Expected Start Date Duration

Prepare questionnaire & necessary 10-03-2020 3 days

documents to collect data

Data collection 28-03-2020 15 days

Data sorting & processing 10-04-2020 10 days

Structure formatting of the report 20-04-2020 10 days

Preparing the final report 12-05-2020 20 days

1.8 Organization of the study

Chapter 1: Introduction

This chapter will cover statement of the problems, rationale of the study, objectives of the
study, a brief of methodological orientation and limitations of the study.

Chapter 2: Literature Review

The discussions, argument and the findings of other researchers related to this study will be
stated in brief here. A precise conceptual framework will be provided based on literature
review.
Chapter 3: Methodology of the Study
Rresearch design, population and sampling Method, sources of data and their collection,
various statistical tools for data analysis, use of tables, graphs etc. will discuss in this
chapter.
Chapter 4: Overview of the study

In this section several charts and table displayed to see the present scenario of Financial
inclusion and mobile financial services. The important recent data also shown in this section
for analyse purpose. The complementary statement also elaborately discussed.

Chapter 5: Data Analysis and Result Discussion

This chapter will discuss basis of the data and information collection, which will be usually
presented in tables, and graphs, analysis and interpretation, can be made. Some implications,
explanations or justification will be made why this obtaining situation exist. The sequence of
the analysis should be made based on the objectives of the study.
Chapter 6: Conclusion and Recommendations

This chapter will discuss researcher’s recommendations and suggestions based on the
findings of the study for rising foreign remittance of Bangladesh. All suggestions will be
based on the study and not just personal perception, hypothetical or arbitrary.
References

M.H. Anderson, Social networks and the cognitive motivation to realize network
opportunities: A study of managers; information gathering behaviours. Journal o f
Organizational Behaviour, 1(12), 2010,51-78.

R. Royaee, A. Salehi and H.S. Aseman, Does Accounting Play A Significant Role In
Managerial Decision-Making? Research Journal o f Business M anagement and Accounting,
1(4), 2 0 1 2 ,57- 63.

J.F. Schar, Buchaltung und bilantz, (4th edition, Berlin, 1921)

1ASB, International Financial Reporting Standards (IFRS), Bucure ti: CECCAR, 2011,82 –
85

Wood F, Sangster A. Business accounting, Book 1, 12th ed. Edinburg Gate, Pearson
Education Limited. 2012.

J. Benjamin, J. Francis, J. Arthur and R.H. Strawser, Financial accounting (Dame Pub. Inc;
Houston, Tx, 1978).

Krcn, Budgetary participation and managerial performance: The impact of information and
environmental volatility. The Accounting Review 67(July), 1992,511-526

Eisenhardt and M. Zbaracki, Strategic Decision Making.” Strategic Management Journal,

13(1), 1992,17-37,

P. Sikavica, H. Skoko, D. Tipurid and M, Poslovno odht&vanje teorija ipraksa donoSenja

odluka, Informator. Zagreb, (Medimarodni rafiunovodstveni standardi, rrif-PLUS, Zagreb,
1994).

B.E. Needles Jr, E.Anderson, R. Henry and J. Caidwell, Jaies C, Principles o f accounting
(Houghton Mittein Co; Boston, 1981)