Unintended consequences of management accounting practices harmonization in transitional economies: A case of Central Europe

The paper addresses the impact of adoption of International Financial Reporting Standards on the mutual relations between financial and management accounting of private Czech companies under foreign control. Being acquired by a parent company, a subsidiary loses its independence and faces institutional duality, as it must respond to the parent’s directives and is simultaneously confronted with local pressures. The study extends current research on the integration of management and financial accounting by identifying a special case from a country where management accounting of subsidiaries converges with financial accounting of parents. A radical change in the traditional organization of management accounting is the strategic response of subsidiaries to the constraints of the local regulatory framework for financial reporting and taxation.