Managerial Accountants and Investment Efficiency

ABSTRACT

This study explores the relation between a firm’s employment of managerial accountants and the efficiency of its investment decisions. To investigate this, we track the yearly employment levels of managerial accountants within firms and find a positive association with investment efficiency. This positive association persists after controlling for financial accountants and multiple measures of financial reporting quality, suggesting the effect operates through improved internal information. Cross-sectional tests show that the relation is concentrated in firms with greater internal information asymmetry and more complex overhead cost allocation. A staggered difference-in-differences (DiD) design exploiting state implementation of the 150 credit hour CPA rule further alleviates endogeneity concerns. Our study contributes to the investment efficiency literature and highlights an important benefit of employing managerial accountants. The findings are particularly relevant, given the recent shortage of accounting professionals.

Data Availability: Data are available from public sources and third-party data providers.

JEL Classifications: M41; M51; J21; G31.