HOW MANAGEMENT CONTROL SYSTEMS USAGE AFFECTS BUSINESS PERFORMANCE: EVIDENCE FROM PORTUGUESE FIRMS

This dissertation studies the impact Management Control Systems (MCS) usage has on the financial performance of firms. MCS are seen as instruments that can be used by managers to achieve the company goals more easily, through an increase in efficiency and effectiveness of the operations performed. To test this relationship empirically, data regarding firm characteristics was collected through a questionnaire targeted at Portuguese non-financial firms. Additionally, it was also gathered hard data comprising the financial performance of the firms between the years 2010 and 2020. Afterwards, Propensity Score Matching (PSM) was used to obtain a sample of comparable firms. Finally, a regression model was fitted to panel data comprising the sample of comparable firms by using the between regression estimator (between effects). The results obtained reinforce the argument that MCS usage is beneficial to the financial performance of firms and helps them achieve their goals. Specifically, it was found that MCS have a significant and positive effect on Return on Equity (but not on Return on Assets). These results are robust to the PSM specifications but not to different specifications of regression models.