Strategic management accounting (SMA) is central to the accomplishment of organizational objectives. Without the implementation of SMA, it would be quite difficult for a firm to survive, given the competitive nature of business environment in Nigeria. The study examined strategic management accounting and performance of listed firms in Nigeria, a study of selected listed firms in Nigerian manufacturing industry. The study prioritized on three SMA techniques namely corporate planning, capital investment analysis and cost-volume profit analysis. The study employed the descriptive survey design. Structured questionnaire was administered to 144 randomly selected staff of six brewery firms in Nigeria. The data collected were analyzed by the use of descriptive statistics and multiple regression analysis. Findings of the study revealed that corporate planning, capital investment analysis and cost-volume profit analysis positively and significantly influence profitability of selected firms. In addition, the joint effect of these three techniques is statistically significant on firm profitability. To this end, the study suggested that organizations should develop internal capacity and network systems in order to be able to capture external strategic information for decision making. Organizations should also establish units/departments that will specifically focus on collection and analysis of external strategic information.











1.1                       Background to the Study

One of the functionalities of organizations is their strategic drive that enables them compete well in the market through sound decision making process. Ahmad (2014) points that the principal challenge of management accounting lies on the fact that its conventional tools such as variance analysis, budgeting, costing, profit analysis and standard costing lack relevance to address managerial problems in contemporary period . Apart from the irrelevance of these tools, they are only good on paper as they lack applicability in the real world (Ojira, 2014; Ojua, 2016). The mandate of management accounting is to supply information to management of organizations for decision-making. These information most times, neglects information from rival firms. Management accounting only supplies internal information to organizations excluding information from external stakeholders whose actions subtly affect the performance of organization.

The Chartered Institute of Management Accountants (2005) defines strategic management accounting (SMA) as a form of management accounting (MA) that prioritizes on information relating to factors external to an organization, as well as non-financial information and internally generated information. Ojua (2016) maintain that SMA can be captioned from two aspects – SMA as a component of strategically-oriented accounting and the engagement of accounting practitioners in corporate strategic decision-making processes. The application of the tools of SMA is referred to as Strategic Management Accounting Practices (SMAP). SMAP are various tools of accounting that supplies authentic information to various parts of decision-making needs of an organization. The needs of decision-making of an organization are but not limited to strategic costing, target costing, consumer accounting, competitors accounting, strategic decision, planning, control, performance management and evaluation (Khatabb, etal, 2015).  SMA as described by Tillman and Goddard (2008) refers to the application of the systems of management accounting for making strategic decisions. Techniques of SMA as enumerated by them include activity based costing, attribute costing, brand value budgeting,  benchmarking, competitive monitoring position, competitor cost assessment, environmental accounting management, strategic costing, customer accounting, value chain costing and strategic pricing.

The techniques of SMA are effectively utilized by organizations in the developed economies for the sole purpose of making strategic decisions (Ojira, 2014; Ojua, 2016). The impacts of these SMA techniques have been found to positively impact on the growth of organizations (Aremu & Oyinloye, 2014; Khatabb, etal, 2015; Mwangi, 2014). Only few organizations in Nigeria recognized the importance of SMA and have been consistently applying its techniques to enhance their organizational performance (Ojua, 2016). However, the extent to which SMA contributes to the performance of Nigerian firms is limited or perhaps, imaginary (Fagbemi, etal., 2013).

Majority of organizations in Nigeria still apply management accounting in their day-to-day operations. The limitation of management accounting has been its inability to cope with the advancement in business environment (Akenabor & Okoye, 2011). SMA sets the pace for strategic decision making by providing vital information to management of organization which will consequently enhance productivity and organizational performance (Ahmad, 2014; Mwangi, 2014).

1.2           Statement of Problem

In recent times, focus has shifted from management accounting to strategic management accounting. The reason is simply because the latter contains financial and non-financial information as well as internal and external data that are beneficial to the growth of an organization.  Strategic management accounting has moved from reporting historical information, especially on variance analysis, to taking part in the strategic planning process of an organization (Mwangi, 2014).  Strategic management accounting skills are actively applied in the business environment where both market intelligence is sought and evaluated, and strategic decisions are made and competitive strategies put in place. These are factors ensures organization maximizes profits and wealth for its shareholders and also gain competitive advantage over its rivals. Strategic management accounting is prominent in manufacturing outfits where firms gears effort to remain profitable and competitive (Uyar, 2010; Mwangi, 2014). These measures are particularly important in the manufacturing sector where efficiency and cost effectiveness may be used as a competitive tool for growth and profitability, which are measures of financial performance. However, Uyar (2010) maintain that despite the benefits of SMA, many companies still adopt traditional management accounting approach in their daily business activities.


The accounting profession in Nigeria has grown tremendously with the adoption of International Financial Reporting Standard (IFRS) and International Audit Standard (IAS) accounting and auditing standards. Over the years, the challenge to keep costs down in order to keep better performance has been predominant in most companies and especially those listed on the Nigerian Stock Exchange given the pressure from the shareholders for firms to post better performance. With the overall economic situation in Nigeria, investors are looking for companies that can create wealth for them hence companies which perform poorly do not attract investors.  Strategic management accounting offers the best opportunity for firms to compete in the market in order to offer best quality products and services at affordable prices to consumers.  To this end, the study seeks to ascertain how strategic management accounting through its techniques (costing, budgeting, performance evaluation, strategic analysis) affects the performance of listed firms in Nigerian manufacturing industry.


1.3        Research Questions 

The questions central to the study are:

  1. Do strategic cost management practices influence the performance of listed manufacturing firms in Nigeria?
  2. Do strategic budgeting practices influence the performance of listed manufacturing firms in Nigeria?
  3. Do strategic performance evaluation practices influence the performance listed manufacturing firms in Nigeria?
  4. Do strategic analysis practices influence the performance of listed manufacturing firms in Nigeria?


1.4        Objectives of the Study

The main objective of the study is to examine the impact of strategic management accounting on performance of listed firms in Nigeria. The specific objectives are:

  1. To examine the impact of strategic cost management practices on the performance of listed manufacturing firms in Nigeria.
  2. To evaluate the impact of strategic budgeting practices on the performance of listed manufacturing firms in Nigeria.
  3. To assess the effect of strategic performance evaluation practices on the performance of listed manufacturing firms in Nigeria.
  4. To investigate the impact of strategic analysis practices on the performance of listed manufacturing firms in Nigeria.


1.5        Research Hypotheses

  1. H01: Strategic cost management practices have no significant impact on the performance of listed manufacturing firms in Nigeria.
  2. H02: Strategic budgeting practices have no significant impact on the performance of listed manufacturing firms in Nigeria.
  3. H03: Strategic performance evaluation practices have no significant impact on the performance of listed manufacturing firms in Nigeria.
  4. H04: Strategic analysis practices have no significant impact on the performance of listed manufacturing firms in Nigeria.



1.6        Significance of the Study

The use of strategic management accounting practices amongst organizations in Nigeria is inevitable due to their unremarkable performance over years and as a result of weak decisions made on the dependence of obsolete traditional management accounting information. This study through its findings exposes the need for involvement of strategic management accounting in the operations of organization to enhance the performance of organizations. Management of organizations will be informed through the study on how to utilize the techniques of strategic management accounting to boost performance and gain competitive advantage over their rival firms.

This study is equally important to business managers as it espouse the superiority of strategic management accounting over ordinary management accounting. Management of organizations, relevant stakeholders and government regulatory agencies on business affairs will benefit as the study unveils how the provision of business information by SMA affects the profitability, viability and competitiveness of organizations in Nigeria.

In addition to these, this study contributes to empirical literature on the subject matter, which can consequently be consulted by future researchers.


1.7      Scope of the Study

The study is confined to listed firms in Nigerian manufacturing industry. The population of the study comprises 65 manufacturing firms quoted on the Nigerian Stock Exchange. By applying the Taro-Yamane formula, the sample size for the study consists of 39 quoted manufacturing firms in Nigeria. The study covers a six-year period ranging between 2011 and 2016.


1.8          Definitions of Key Terms

Management Accounting

Management accounting provides only financial as well as internal information to the management of organization.




Strategic Management Accounting

SMA provides financial and non-financial as well as internal and external information to management of organization. Strategic management accounting is an improvement over management accounting.

Firm Performance

This refers to extent an organization has succeeded in accomplishing its objectives.  The performance of a firm cannot be determined without the computation of financial ratios. There are many variables used to measure firm performance, but for this study, firm performance is measured by return on asset. Return on asset indicates the extent to which a firm generates profit from using its total assets.


Strategic Cost Management

This refers to the process of effectively planning and controlling the costs involved in a business. The process of cost management involves various activities such as collecting, analyzing, evaluating and reporting cost statistics. Examples of strategic cost management practices are target costing, activity-based costing and value chain costing to mention a few.

Strategic Budgeting

This refers to the process of drawing up a financial plan for a defined period of time, usually a year. This plan includes approximate costs and revenues during a specific period and reflects future financial conditions. Examples of strategic budgeting practices are activity-based budgeting, budgeting for planning and flexible budgeting.



Strategic Performance Evaluation

This refers to the systematic evaluation of the performance of financial and non-financial measures in an organization. Examples of strategic performance evaluation techniques are financial measures, benchmarking and non-financial measures.

Strategic Analysis Practices

This refers to the process of developing strategy for an organization by researching the business and the environment in which it operates. Examples of strategic analysis practices include industry analysis, value-chain analysis and product life cycle analysis.