Anna Rohlfing-Bastian, Professor for Accounting, especially Managerial Accounting at Goethe University Frankfurt, is a principal investigator in A04 “Accounting for Investments in Operating Assets”. Together with Stefan Reichelstein, she examines how accounting information can provide a transparent basis for decisions on operating investments. In addition to her research activities, she is committed to the promotion of gender equality in research and teaching.
Management Accounting: Multifaceted and applied
The career paths we choose often have to do with coincidences. With people we meet. With situations we experience. Or with questions we are faced with – as in my case: “To what extent is the Chancellor’s power to set policy guidelines a managerial accounting function?” Christian Hofmann – now one of my TRR 266 colleagues – asked me this question during an oral exam in business administration at the University of Tübingen. While I was answering this question, I realized something important: Managerial accounting has a variety of interfaces with other disciplines. And it is applicable to many different areas of life. This fascinated me deeply – and it still does today. Especially the high relevance for politics and practice is extremely exciting. Although we need to stylize a lot in the area of analytical research, many of our concepts are very applied. In most cases, we can derive concrete recommendations for action for companies, politicians, and regulators. This also makes it much easier to get into discussions about our findings with others. These discussions, in turn, can provide input for new research questions.
With our research, we can contribute to the prosperity of society at large and to greater distributive justice.
A contribution to society
Research is not an end in itself for me. I want to deliver contributions to society. As probably do most researchers – regardless of their discipline. In the case of a physician who is developing a treatment for dementia, it is obvious to most people what this contribution consists of. For business administration, it’s a different story. For people outside our area, this often requires explanation – although the contribution can be just as concrete. Our findings, for instance, could help launch a dementia medication – by creating conditions that give a company the incentive to develop and produce this medicine in the first place.
With our research, we can contribute to the prosperity of society at large and to greater distributive justice. In accounting, we also have a special mandate to provide transparency, because accounting is the language of firms. A language that managers use to communicate the firm’s financial and economic information – internally as well as to shareholders and creditors. It must be accurate, precise, and comprehensible. We can contribute to this, for example, by identifying the relevant information and the form in which it should be communicated, in order to ensure the greatest transparency possible for the various stakeholders.
Our goal is to enable companies with more complex structures to apply our model to concrete investment decisions.
New model for reliable investment decisions
In TRR 266 project A04, we investigate which information is relevant from an economic point of view when making decisions about long-term investments. Those decisions have an impact far into the future. Their success depends to a great extent on how economic conditions – that are relevant for decision-making – develop. However, since future conditions can only be estimated in advance, investment decisions are associated with uncertainty. With the so-called levelized product costs, we developed a model that allows for long-term investment decisions using accounting information.
We are working on validating and expanding this approach. Currently, our model depicts a very simple scenario: one product, one market, one decision-maker, one country, one tax rate. Our goal is to enable companies with more complex structures to apply our model to concrete investment decisions. This is why we would like to extend the model to multiple products and decision makers – as well as to multinational companies operating in multiple countries and in different tax systems.
We show how firms can motivate their employees to commit to projects with uncertain productivity.
Incentivize: Projects with uncertain productivity
Last year we published the paper „Incentives in optimally sized teams for projects with uncertain returns”. Basically, a kind of preliminary work to our current project, which we can build on. This study is about uncertainty as well. And about observing companies as closely as possible in order to develop a model that is able to represent the complexity of business reality accurately.
In this study, we use a theoretical model to investigate how incentive structures and organizational measures should be designed when it is unclear to what extent the work actually performed will be reflected in the success of the project. This is the case, for example, in development departments of companies, such as in the pharmaceutical sector. Employees cannot be sure about how their efforts for developing a new medication will actually be turned into financial success. The same applies to employees who drive digital transformation processes in firms.
We show how firms can motivate their employees to commit to projects with uncertain productivity. Our results reveal that compensation structures and organizational decisions must be quite different for projects with uncertain productivity than thought previously. For example, we demonstrate that the team size should be smaller when productivity uncertainty increases. We also find that team size and compensation should be adjusted simultaneously to provide efficient incentives.
Not only women can benefit from gender equality, but the science system as a whole.
More women in science
In addition to my research, I am also committed to promoting female young researchers within the TRR 266. The proportion of women in business and economics is still far too low. Although we have now reached a 50:50 ratio for first-year students, this does not apply to doctoral positions or professors. As you move up the academic career ladder, the gap widens. And this has nothing to do with professional qualification, but rather has grown historically. Outdated role models still shape female careers. The conditions of an academic career are also crucial in this regard. This career path is still associated with a great deal of uncertainty and often collides, for example, with family planning. I would like to help improve these conditions and break down outdated structures. So that we can achieve a natural balance. Not only women can benefit from gender equality, but the science system as a whole. Because studies show that mixed-gender teams are clearly more productive than all-male or all-female teams.
Networks and role models
For this reason, I have developed a mentoring program for our female young researchers in the TRR 266. Postdocs and doctoral students have the opportunity to talk to experienced female professors in tandems and receive important first-hand information. For instance: What is important when going on the job market? And they benefit from our networks. This is an important approach, because the lack of networks, role models, and exchange of information are also key factors that make it difficult for women to pursue an academic career. Those factors create an information asymmetry that puts women at a disadvantage. However, such measures can only complement the conditions established by universities and policymakers – who bear central responsibility for gender equality. Tenure-track procedures, which facilitate access to a lifetime professorship, are a very important step in the right direction.