Accounting for strategic investment decision-making under extreme uncertainty. Issue 2 (June 2016)

• Record Type: Journal Article
• Authors: Elmassri, Moataz Moamen; Harris, Elaine Pamela; Carter, David Bernard
• Is Part Of: British accounting review. Volume 48:Issue 2(2016)
• Page Start: 151
• Page End: 168
• Publication Date: 2016-06
• Subjects: Strategic investment decisions -- Strong structuration theory -- Extreme uncertainty -- Net present value -- Egypt -- Strategic management accounting -- Ownership structure -- Political structure; Accounting -- Periodicals; Accounting -- Great Britain -- Periodicals; Comptabilité -- Périodiques; Comptabilité -- Grande-Bretagne -- Périodiques; 657.05
• DOI: 10.1016/j.bar.2015.12.002
• Languages: English
• ISSNs: 0890-8389

Abstract

Abstract: This study focuses on processes employed by organisational managers making strategic investment decisions (SIDs) in an environment of extreme uncertainty in post-revolution Egypt. Our study illustrates how significant social, political and economic uncertainty impacts upon the utility of capital investment appraisal techniques employed in management accounting decision-making. To engage in this analysis, we employ strong structuration theory as a lens to examine how local Egyptian managers (agents-in-focus) respond to the impact of emergent structures that emanate from the post-revolutionary context in their strategic investment decision-making (SIDM). Our empirical evidence includes focused interviews with twenty-one local managers to understand the experience of accounting for decision-making under extreme uncertainty. Our analysis demonstrates that non-financial considerations and objectives take precedence over the technical 'accounting' measures, for example net present value (NPV) in post-revolution SIDM processes. In particular, recognising and responding to shifting labour power and short-term sacrifices (such as rejecting merger opportunities) become comparatively more important than the pre-supposed rationality of the NPV criteria. However, as multi-national corporations insist on the calculation of NPV by their Egyptian subsidiaries, local managers reproduce the imperfect NPV as a communication tool in relation to capital investment decisions, whilst resisting its persuasiveness in favour of more qualitative criteria.