Management accounting practices and financial performance of manufacturing firms within the Volta Region, Ghana

Abstract

Management accounting practices are increasingly gaining dominance in modern business environments due to their ability to improve financial performance. However, this assertion remains unclear within the scope of Ghana’s manufacturing industry with particular focus on firms within the Volta region. In view of this, the effects of management accounting practices (MAPs) on manufacturing firms’ financial performance were investigated in the region. Using the PLS-SEM approach, the study specifically investigated the individual effects of bookkeeping, cost management, quality cost analysis and internal audit on financial performance. The quantitative approach, explanatory research design, structured questionnaires and the behavioural theory of a firm were all employed. The study processed valid data set of 123 via IBM SPSS Statistics (v. 26) and Smart-PLS. Based on the PLS-SEM output, the study revealed that all the four management accounting practices had significant positive effects on financial performance. It was concluded that cost management has the strongest significant effect on financial performance; thus, concluding that implementing these practices would lead to improvements in the financial performance of manufacturing firms in the Volta region. The study recommended that policy makers including government bodies, agencies and management of the manufacturing firms should strengthen their management accounting practices in the manufacturing industry in other to promote financial performance.