Updating Accounting Systems: Longitudinal Evidence from the Healthcare Sector

Eva Labro () and Lorien Stice-Lawrence ()
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Eva Labro: Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599
Lorien Stice-Lawrence: Leventhal School of Accounting, University of Southern California, Los Angeles, California 90089

Management Science, 2020, vol. 66, issue 12, 6042-6061

Abstract: This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year timespan in a large sample of U.S. hospitals. We provide evidence that hospitals update their AS in response to three types of pressures: economic pressures , such as increases in the quality of accounting information driven by vendor rollouts of improved AS; coercive pressures imposed by regulators mandating certain practices, such as internal control practices imposed by Sarbanes–Oxley Section 404; and mimetic pressures for hospitals to conform their AS to those of their peers, such as local county and prominent “celebrity” peers. We find that only economically driven updates lead to economic benefits in the form of lower operating expenses and higher revenues. In contrast, we find some evidence that AS updates prompted by coercive regulatory pressures actually impose economic costs in the form of higher operating expenses.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:66:y:12:i:2020:p:6042-6061

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