Management accounting systems in venture capital-backed start-up companies

Simone Aresu, Luigi Rombi and Andrea Cardia

MANAGEMENT CONTROL, 2019, vol. 2019/3, issue 3, 35-58

Abstract: Management Accounting Systems (MAS) can help start-up companies to manage resource allocation and satisfy investors? information needs. This study helps to investigate the main features of MAS adopted by Italian venture capital-backed start-up companies. Also, the study aims to analyse how venture capitalists monitor their investment through management accounting. Thirty semi-structured interviews were carried out to gather information from a corporate and an investor perspective. Our results show that both start-up companies and investors consider MAS as useful to make conscious and target-oriented decisions. MAS are used by investors to monitor the investee?s performance and contribute in aligning goals? time horizon. In addition, MAS help investors to develop a cooperative relationship with start-up companies and to provide business advices. This study contributes to the agency-theory debate by showing that MAS help not only to reduce information asymmetries but also to foster a dialogue and to benefit from investors? human capital.

Date: 2019
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