Management Control

Management Control Systems in Social Services

This research project took its point of departure in the literature demonstrating dilemmas of balancing control and flexibility and social work with control in public sector organizations when budget control is tightened. The purpose of the project was to examine how managers in social service departments develop and use controls when confronted with tightened budget controls and how they make sense of the changes and introduce new accounting practices in a professional context close to the end service. 

The overall research questions were: (1) How do municipalities use control systems to balance between conflicting objectives of tight budget control and the demand for flexibility and need for innovation in order to provide quality care? and (2) How do municipalities introduce tight budget control in a professional setting and how is new accounting practices enacted in the social services?

The project was a joint collaboration with Anne Kirstine Svanholt, Aalborg University and Karina Skovvang Christensen, Aarhus University. We have published three papers in international journals and a couple of papers in Danish journals.

Selected publications

Bukh, Per Nikolaj & Anne Kirstine Svanholt. 2022. Balancing tight budget control and quality within social services in a Danish Municipality. Scandinavian Journal of Public Administration, Vol. 26, No.3, pp. 91-113. 

Bukh, Per Nikolaj; Karina Skovvang Christensen & Anne Kirstine Svanholt. 2021. Making sense of cost-consciousness in social work. Qualitative Research in Accounting and Management, Vol. 18, No. 1, pp. 102-126.

Bukh, Per Nikolaj & Anne Kirstine Svanholt. 2020. Empowering middle managers in social services using management control systems. Journal of Public Budgeting, Accounting & Financial Management, Vol. 32, No. 2, pp. 267-289.

Bukh, Per Nikolaj, Karina Skovvang Christensen & Anne Kirstine Svanholt. 2020. Omkostningsbevidsthed i socialt arbejde: Fra spændingsfelt til professionalisme. Tidsskrift for Professionsstudier, Vol. 31 (september), pp. 94-105

Bukh, Per Nikolaj & Anne Kirstine Svanholt. 2019. Styring i spændingsfeltet mellem vilde problemer og stramme budgetter. Samfundslederskab i Skandinavien, Vol. 34, No. 3, pp. 229-266.

 

Performance Funding of Danish Public Schools

Although the percentage of young people completing an upper secondary education in Denmark has improved, it is still considered too low. One of the barriers identified is that not all students gain the qualifications needed to enrol and succeed in upper secondary education when they attend a basic school.

In 2016, the Danish government decided to implement a performance funding programme in the basic education schools to reduce the number of students with low examination grades. The program states that schools which meet specific targets for improving their examination grades within a 3-year period will be rewarded with a bonus; hence increasing the funding of the school with more than 5% in the following year.

In this research project we examined how the programme was perceived by different levels of management in a municipality, how the funding programme affected educational practices at the schools, and how hierarchical levels as well as intentions and actions are coupled. Top management may decide on the overall responsiveness to the government’s incentive programme, but local initiatives and vertical coupling, i.e., coupling between hierarchical levels, and horizontal couplings of intentions and initiatives are important in achieving objectives and implementing strategies.

The project is a joint collaboration with Morten Lund Poulsene and Karina Skovvang Christensen, Aarhus University. We have published articles in international journals and a couple of papers in Danish journals, and we have still one more paper in the publication pipeline.

Selected publications

Poulsen, Morten Lund, Per Nikolaj Bukh & Karina Skovvang Christensen. 2023. (Dys)functionality of intentions or outcomes? Performance funding of Danish schools. Accounting, Auditing & Accountability Journal Vol 36, No. 1, pp. 267-294.

Bukh, Per Nikolaj; Morten Lund Poulsen & Karina Skovvang Christensen. 2022. Performance Funding: Exam Results, Stakes and Washback in Danish Schools. Sage Open. January-March, pp. 1-13.

Bukh, Per Nikolaj, Karina Skovvang Christensen, Morten Lund Poulsen & Anne Kirstine Svanholt. 2021. Præmier og præstationer - skolelederes meningsskabelse. Samfundslederskab i Skandinavien, Vol. 36, No. 6, pp. 287-323.

 

Management Control and Budgeting in financial service firms

This project is based on a case study of a listed retail bank. Regulatory prescriptions for reliable and forward-looking information and capital market pressures for predictable goal achievement are encapsulated in the accounting practices. Sustaining the possibility of holding decision-makers accountable for publicly disclosed targets and individual goals, control elements are not static artefacts but develop to balance short-term achievements with the long-term implementation of diverse corporate strategies. In the project, we disentangle budgeting as a fundamental management control system.

The bank’s forecast model projects future macroeconomic scenarios, which are instrumental in disclosing, updating, and restating financial expectations to the public and constructing corporate plans. However, the corporate budget is essential for controlling costs, and the branch-level budgets commit branch managers to challenging goals, generating a sense of ownership and responsibility. All these accounting and control elements evolve within and across budget cycles.

Further, we study risk management and delve into credit risk management as an inherent feature of operating in the banking sector. Regulations prescribe risk quantification, but banks do not only seek to comply by black-boxing uncertainties when valuating risks. Thus, credit risk quantification can be unfolded as a valuation process that blends statistical modelling with human judgment, and to quantify the uncertainty of customers repaying their loans, various risk actors must combine their professional knowledge. 

The project is a collaboration with Niels Sandalgaard from Aalborg University and Amalie Ringgaard from Cork University Business School. We have written four papers based on the project. All of them have been presented at various conferences, and we hope to have them published in the coming years.

Selected publications

Bukh, Per Nikolaj, Amalie Ringgaard & Niels Sandalgaard. 2024. Moving beyond Beyond Budgeting: A case study of the dynamic interrelationships between budgets and forecasts. Accepted for publication in European Accounting Review.

 

Management Accounting in Museums

Danish museums are undergoing changes, and due to mergers, expansions, and a significant focus on visitor numbers, the demands on museum management are also changing. In this context, we focus on how these changes affect the museums' control package. Further, our aim is to contribute to improving management accounting practices in the museum field. Both qualitative and quantitative approaches will be used in this project.

Initially, our plan was to do both case studies and quantitative research. As a starting point, we gained access to data from the budget and annual reports from about 100 Danish state-approved museums, and based on this, we have completed one article. As a natural next step, we are analysing the data further and expect to complete one more article based on cost stickiness and revenue budgeting.

In November 2023, an expert group issued on behalf of the Minister of Culture a report proposing a new funding model for the state-approved museums in Denmark. The proposal has led to extensive debate in the Danish media, where museum directors from several museums and other key players have criticised the proposal. I have participated in the debate and developed an alternative model. As part of this project, we will follow this development.

The project is a joint collaboration with Morten Lund Poulsene and Karina Skovvang Christensen, Aarhus University and Niels Sandalgaard, Aalborg University. 

Selected publications

Bukh, Per Nikolaj, Karina Skovvang Christensen, Morten Lund Poulsen & Niels Sandalgaard. 2024. Resultatfinansiering af museer: Udfordringer og muligheder. København: Jurist- og Økonomforbundets Forlag

Bukh, Per Nikolaj, Karina Skovvang Christensen, Morten Lund Poulsen & Niels Sandalgaard. 2024. På vej mod en museumsreform:  En analyse af den foreslåede finansieringsmodel. Økonomi & Politik, Vol. 97, No. 2, pp. 79-93.

Sandalgaard, Niels & Per Nikolaj Bukh. 2023. Budget ratcheting in museums. Journal of Public Budgeting, Accounting & Financial Management, Vol 35, No.5, pp. 568-586.

 

Valuation studies of Management Control in the insurance sector

This research proposal explores valuation processes in management control practices within the insurance sector, focusing on how accounting and professional judgment interplay. The suggested study is situated in the broader context of accounting literature that sees accounting as a valuation-producing machine, influenced by human judgment and regulatory frameworks. The proposal identifies three distinct yet interrelated perspectives that can be developed into standalone papers.

The first perspective investigates how insurance companies value human lives, integrating statistical modelling with accounting devices and human judgment. It explores the tensions between inclusive insurance offerings and individualized pricing strategies, particularly regarding the valuation of lives and excluding risks like mental illnesses from insurance coverage. The second perspective delves into the evolution of risk management practices in the insurance sector. The study will examine the management of underwriting and sustainability risks, including the impact of natural disasters and stranded assets. The focus will be on how risk management is a socially constructed process, where risks are valued and managed, and how this influences the design and use of control elements in insurance companies. The third perspective addresses the impact of regulatory demands on internal risk management practices and management control systems. It looks at how insurance companies comply with regulations like Solvency II and the CSRD, which necessitate detailed quantification for capital requirements and sustainability reporting. The study will explore how these valuation processes for reporting are integrated with management control systems and their influence on decision-making regarding customers and investments.

The methodology involves cross-sectional case studies of insurance companies in Ireland and Denmark, aiming to understand how cultural and technological differences impact management control systems. This proposal intends to contribute to accounting literature by highlighting the complex relationship between accounting valuation, risk management, and regulatory compliance in the insurance sector. It aims to offer insights into how valuation processes are influenced by human judgment and institutional demands, particularly in the context of managing and reporting risks.

The project is a joint collaboration with Amalie Ringgaard and Michell Carr from Cork University Business School. We started working on this project in June 2024. My intention is that this project will be central to my research focus in the following years. The data collection in insurance companies will start in Spring 2025. It is expected that at least three papers, aimed at leading international accounting journals, wil be developed.