The Strategic Relevance of Competitor Cost Assessment - an Empirical Study of Competitor Accounting

A. HOFFJAN, C. Heinen

Journal of Applied Management Accounting Research

2005, vol. 3, n°1, pp.17-33

Départements : Comptabilité et Contrôle de Gestion

In order to facilitate collecting andanalysing accounting information with acompetitive focus and in the context ofstrategic management accounting, the termcompetitor accounting has been developedin the literature. In the present study, theeffectiveness of a central instrument ofcompetitor accounting, the assessment ofthe competitor's cost, is examined in alaboratory experiment. The results revealthat cost leaders who are aware of theircost lead, act differently than cost leaderswithout such knowledge. Informed costleaders implement their strategic decisionsmuch more resolutely. They employ a farmore expansive production quantity policyand a more aggressive pricing policy.Through pursuing these strategiesaggressively, this knowledge of thecompetitive strengths at the cost level leadsto better company performance.