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Impact of Strategic Initiatives in Management Accounting on Corporate Financial Performance: Evidence from Amman Stock Exchange

Author(s): Husam Aldeen Al-Khadash | Mete Feridun

Journal: Managing Global Transitions
ISSN 1581-6311

Volume: 4;
Issue: 4;
Start page: 299;
Date: 2006;
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Keywords: ABC | JIT | TQM | strategic initiatives | improvement in financial performance

This article aims at investigating the link between the practice of Activity Based Costing (ABC), Just-in-Time (JIT), and Total Quality Management (TQM) as strategic initiatives and the improvement in corporate financial performance of 56 industrial shareholding companies in Jordan. Ordinary Least Squares Regression analysis is used to test the association between the awareness level of the importance of using the initiatives and the level of adopting these initiatives. It is also used to identify the improvement in ROA as a mean of financial performance which is associated with the initiatives. Analysis shows that 26.8% of the companies under consideration use at least one of the strategic initiatives. In addition, the awareness level of the importance of using the strategic initiatives is found to be significantly high among the financial managers, but such awareness is not reflected in the implementation of these initiatives. Furthermore, strong evidence emerges that the use of strategic initiatives leads to improvement in financial performance of the companies under consideration.
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