Management Accounting Essence Research Based On The Transaction Cost Economics

The development of management accounting theory and practice face the dual dilemma .The narrow view leads low awareness of management accounting—confined to"tool theory"and"information theory", which is bound to inhibit the function of the play, result in waste of resources. Researching management accounting begins with identifying its essence. Transaction cost economics provides us with a new vision. It is a magnifying glass to understand the microscopic enterprise world. In the paper, there are the theory and practice clues. Theory area, starting from the most basic unit of transaction, the enterprise is a collection of transactions. The transactions inevitably produce costs. Management accounting based on hierarchical structures and trade contracts is an effective way to govern internal and external transactions. It is composed by the management accounting system and practice, which are rules and practices in transaction cost economics world. Through hierarchical structure and administrative authority ,management accounting make rules and practices become behavioral biases of the members , and enhanced into members values by long practice, finally institutionalized. Practice area, explore the development and evolution power of three major areas in management accounting—the production area, the field of performance evaluation, Strategic Management Accounting area. Analysis the evolution of the various areas by transaction cost economics, and obtain the law—the pursuit of minimizing transaction costs is the constant pursing objective of management accounting. Concluding management accounting essence is an institutional arrangement of enterprises to minimize transaction costs. Creating this article is to reveal management accounting essence, to remind enterprises from the macro level to focus on institution design, from the micro-level to improve details of the transaction. Management Accounting should participate in the entire process of the corporate decision-making and control.