Abstract
Structuring activities into responsibility centers and optimization of resource is a priority in meeting investors’ performance and profitability expectations in both small and large organizations. Studies have shown that to meet these expectations, adequate performance evaluation and reward system are managers’ challenges. This study investigated the effect of responsibility accounting on profitability of listed companies in Nigeria. <i>Ex-post facto</i> research design was adopted. The population was 173 quoted companies on the Nigerian Stock Exchange as at 31st December 2016. Ten companies were selected using stratified and purposive sampling technique. Data were extracted from published financial statements of sampled companies; validity and reliability of the data were premised on the scrutiny of the external auditors. Descriptive and inferential (Panel data regression) statistics were used to analyze the data. The study revealed that profitability measured by NPBT, of listed companies in Nigeria is significantly influenced by responsibility accounting <i>(RA), F-Stat=114.56, AdjR<sup>2</sup>=.0.6964, p=0.000</i>. There is no significant difference in the result of NPBT with and without the control variable of firm size. The result with control variables revealed F-Stat=87.63; <i>AdjR<sup>2</sup></i>=0.7242; <i>P=0.000</i>. The study also revealed that RA had a positive significant relationship with EPS with control variables of firm size, <i>F-Stat=6.56, AdjR<sup>2</sup>=0.1442; P=0.000</i>. However, without control variables, no significant effect of responsibility accounting on EPS was observed as shown in the following result: <i>F-Stat=0.45, AdjR<sup>2</sup>=-0.0112, p=0.64</i>. Furthermore, the study revealed that profitability measured by ROA exhibited an insignificant relationship with RA given the following results, <i>AdjR<sup>2</sup>=0.0089; P=0.000</i>. RA with control variables of firm size, insignificantly affected ROA while Firm Size exerted significant positive effect on ROA (as the size of the firm changes by a unit, ROA increased by 23.9% as seen in model 3b) given the following result: <i>AdjR<sup>2</sup>=0.0399; P=0.782</i>. This study concluded that responsibility accounting had an influence on profitability of listed companies in Nigeria. The study recommended that since profitability is the whole essence of responsibility accounting, managers should ensure delegation of task with responsibilities clearly spelt out, regular appraisal process, achievable project budgeting, instituting cross functional teams and efficient reward systems put in place towards achieving the corporate objective that would influence better profitability.
Highlights
As operational cost increases by 0.652 million, judging from the result of the combined effect of the independent variable on the dependent variable, the probability of the F-statistics with ρ=0.00 less than 0.05 level of significance adopted for this study revealed that responsibility accounting measured as cost of sales and operational cost significantly affect profitability measured as net profit before tax (NPBT); the adjusted R-squared of 0.696 is an indication that the joint variation in the independent variable would lead to 69.6 per cent changes in NPBT of listed companies in Nigeria
This study investigated the effect of responsibility accounting on profitability
Managers should boost their asset base as this is shown in the findings that firm with larger asset base were able to control their cost of sales and operational cost significantly influence their profitability level
Summary
Umobong [52] averred that the primary motive of business operations is to have returns and economic value from investments, and as such only profit generating capability activities can guarantee a continuous going concern for companies. The existence and survival of businesses largely depend on the achievement of profitability objective of the organization. Hanini [24] posited that business failures are common factors in the real business cycle if proper functioning and co-ordinations are not achievable among the administrative subunits or responsibility centers. The individual managers are directly held responsible for their actions. Attaining organizational objectives requires a proper functioning structure within the establishment. Hanini [24] that competent and skilled managers are to delegate authorities and responsibilities based on the structure and size
Sign-in/Register to view highlights & summary 
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call