Residual Analysis: A Better Methodology for Contingency Studies in Management Accounting.

Key Points

• The study aims to highlight the importance and practicality of using residual analysis in contingency theory within management accounting.
• Outlined definitions of fit concepts and suggested test methods.
• Applied residual analysis to examine interactions between authority structure and market competition on financial performance.
• Developed guidelines to enhance residual analysis for future contingency studies.
• Illustrated the interaction fit of authority structure and market competition positively impacts financial performance.
• Evaluated the effectiveness of residual analysis in conceptual modeling for contingency theory.
• Proposed enhancements for applying residual analysis in management accounting studies.