Impact of Activity-based Costing on Financial Performance in the Czech Republic

POKORNÁ JANA. 2016. Impact of Activity-Based Costing on Financial Performance in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(2): 643–652. Looking for factors aff ecting business performance is one of a central concern of business economists for several years. Activity-Based Costing (ABC) is a management tool that provides additional and more accurate information on the costs and company performance, thus contributes to better manager decision making, and thus has potential to aff ect the fi nancial performance. This paper aims to investigate the link between the use of ABC among corporations in the Czech Republic and improvement in corporate fi nancial performance. The empirical survey was carried out among 548 Czech medium-sized and large companies from various economic sectors. Financial performance was measured by standardized Return on Assets from 2005 to 2011. The ABC expansion among enterprises in the Czech Republic is currently comparable with neighbouring countries, although the extent of its use is lower. Surprising but statistically signifi cant results show that businesses that use ABC have on average the same or even lower fi nancial performance than businesses without ABC.