Business unit controllers' credibility and the hardening of local forecasts
Leona Wiegmann, Lukas Petrikowski, Lukas Goretzki
Contemporary Accounting Research · 2024 · Volume 41 · Issue 1
Abstract
Focusing on multidivisional companies, this paper analyzes the hardening of local forecasts at the intersection of business units (BUs) and the corporate finance function. It investigates how BU controllers, accountable to both local management and the corporate finance function, seek to establish themselves as competent and trustworthy forecasters vis-à-vis their functional superiors. Drawing on Goffman's dramaturgical sociology, we demonstrate how these encounters constitute episodes in a multiperiod hardening game feeding into the management of forecast quality and anticipatory control. We illustrate how expressive performances of their competence and trustworthiness are vital for BU controllers to manage vertical information flows between the local and the corporate level and for aligning corresponding interests. Convincing performances can reinforce BU controllers' status as stewards of the forecasting process and help to maintain a “truce” between the local and the corporate level, assuring corporate controllers that the unit's future is under control.
Keywords
controller roles, credibility, forecasting, hardening, soft accounting numbers, chiffres comptables approximatifs, crédibilité, fonctions des contrôleurs, prévisions, renforcement
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