Understanding financial information used to assess small firm performance : an Australian qualitative study

Halabi, Abdel K., Barrett, Rowena, & Dyt, Robyn (2010) Understanding financial information used to assess small firm performance : an Australian qualitative study. Qualitative Research in Accounting & Management, 7(2), pp. 163-179.

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Purpose The purpose of this paper is to investigate the reality of financial and management accounting in a small group of small firms. Specifically, from the owner's perspective, an exploration is undertaken to see what financial information is collected, how it is used (or not) to make business decisions and evaluate the firm's performance, and the role played by the accountant in that process.

Design/methodology/approach A phenomenological paradigm underpins this exploratory study. Semi‐structured interviews were undertaken with the owners of ten small firms, where the focus was on understanding what happens in an organisational setting, as opposed to theory and textbook practice.

Findings The qualitative data supported prior research in other countries. The in‐depth analysis revealed a very basic understanding of accounting information and problems with the financial literacy amongst these small firm owners. Accounting reports were not widely produced or used, so an informal assessment, such as how much cash was in the bank, was the primary means of assessing business performance. Accountants were used for taxation services, although some owners sought more general business advice.

Originality/value An understanding is developed of why there might be a gap between textbook rhetoric and reality of accounting practice in small firms. The conclusion is that accounting textbooks need to include more information about the reality of financial management in small firms.

Impact and interest:

4 citations in Scopus
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ID Code: 75423
Item Type: Journal Article
Refereed: Yes
Keywords: Financial Information, Accountants, Australia, Small Enterprises, Financial Reporting
DOI: 10.1108/11766091011050840
ISSN: 1176-6093
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300) > Small Business Management (150314)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Management
Deposited On: 24 Aug 2014 23:59
Last Modified: 26 Aug 2014 03:44

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