Proceedings

IMPROVEMENT IN ACCOUNTING SYSTEM
AND PERFORMANCE MANAGEMENT
OF IRAN’S UNIVERSITIES IN THE LIGHT
OF CONTINGENCY THEORY
Martin BROAD 1 & Abbas ALIMORADI
University of Southampton, United Kingdom
ABSTRACT
Many external factors have affected Governmental Universities of Iran in the past six years.
Decentralization in terms of delegation of authority, financial pressure, and competitive
position for better quality and higher performance in teaching and research are the main
factors. This study investigates the effects of the aforementioned variables on the accounting
systems of Iran’s higher education institutions. According to Contingency Theory in
accounting, there is no identical management accounting system or control system to fulfil the
needs of all organizations in every situation (Chenhall, 2003, Otley, 1980). Based on the
Contingency Theory literature a theoretical model has been developed and empirically tested.
Data were collected from the Governmental Universities in Iran during the latter part of 2009
through a postal questionnaire. All 126 Governmental Universities in Iran were sent the
questionnaire and responses were obtained from Financial, Education, and Research
Departments in each university. Fully completed and usable questionnaires were collected
from 246 Departments (65.1 percent response rate) and Structural Equation Modelling
(SEM) was used to test the model. The preliminary results and analyses support the existing
literature in the most parts. Present study contributes in methodology and theory areas by
several points as well as proposing some suggestions for policy makers of Iran’s Higher
Education and Universities’ Management.
KEYWORDS: Accounting System, Performance Management, Contingency Theory,
Higher Education, Structural Equation Modelling, Developing Countries, Iran
INTRODUCTION
Iran has two big categories of universities namely Governmental and Nongovernmental
Universities. Still the main load of higher education is on the
Governmental Universities which are funded by the Government for the majority of
their activities. Four basic reasons encouraged the researcher to undertake this study.
First, Iran’s Parliament passed the Forth Five-year Development Plan Act in 2004,
thereby proposed a reform for the universities and delegated them authority for
decision-making more than before. Second reason is the low performance of higher
education institutions in Iran in term of international ranking, as the best universities
in Iran are not ranked within the first 500 universities. Third, financial pressure and
competitive positions as other factors have been imposing on the universities during
1 Correspondence address: Martin BROAD, Director MSc Accounting and Finance, University of
Southampton, UK; email: aas1e08@soton.ac.uk
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