Business growth and performance and the financial reporting practices of Australian manufacturing SMEs

Abstract

This volume justifies and presents an exploratory research study of the proposition that relevant and timely financial reporting to, owner-managers on the business affairs of their small or medium-sized enterprises is a necessary if not sufficient condition for achieving growth and performance enhancement when such concerns actively pursue development strategies. This proposition is specifically examined for a representative sample taken in 195 of over 1,000 smaller manufacturing enterprises legally organised as proprietary companies in Australia. The study has discovered much about which enterprise and financial management characteristics of the businesses investigated seem to determine their historical and future-oriented financial reporting practices. Chief amongst these are development orientation, extent of owner-management, technological complexity, degree of reliance upon external financial advice, and financial reporting climate. It has also been possible to demonstrate how the financial challenges and problems of enterprise growth and development create strong imperatives for improved financial reporting over time. However, the study has been unable to establish any statistically significant associations between the extent and frequency of financial reporting undertaken and certain measures of enterprise growth and performance.