EXPLORING THE CONSTRUCTION OF BU CONTROLLERS’ CREDIBILITY IN THE HARDENING OF LOCAL FORECASTS

Accounting and Management Control

Speaker: Lukas GORETZKI  (Stockholm School of Economics)

Room T017

Abstract:

By studying forecast review meetings in a multidivisional company, this paper analyzes the hardening of local forecasts at the intersection of business units (BUs) and the corporate finance function. Considering their accountabilities to both local management and the corporate finance function, it investigates how BU controllers try to establish themselves as competent and trustworthy forecasters vis-à-vis their functional superiors. Drawing on Goffman’s dramaturgical sociology, this study demonstrates how encounters between BU and corporate controllers constitute episodes in a multi-period hardening game, which serves to manage forecast quality and facilitate anticipatory control in a multidivisional organization. BU controllers’ expressive performance of their competence and trustworthiness can hereby enable the contemporaneous construction and passing of both BUs’ forecasted performances and the BU controllers’ (re)presenting them as credible. In this connection, we illustrate how keeping up an appearance of a credible forecasting expert is vital for BU controllers to strategically manage vertical information flows between the local and the corporate level as well as for aligning corresponding interests. Establishing themselves in the “forecasting drama” with several acts as credible forecasting experts does not only reinforce BU controllers’ status as stewards of the forecasting process. It also has broader implications for the maintenance of a “truce” between the local and the corporate level that relates to a feeling of comfort among corporate controllers that their local counterparts are ensuring that the future of their unit is under control.