Debt pressure and interactive use of control systems: effects on cost of debt Articles uri icon

publication date

  • September 2018

start page

  • 3544

end page

  • 3558


  • 42

International Standard Serial Number (ISSN)

  • 1044-5005


  • We study if debt pressure drives the use of interactive management accounting and control systems (MACS) and its consequences. We build on Simons (1990) and argue that financing pressures can threaten strategic investment. To alleviate debt pressures and reduce information asymmetries with lenders, managers are predicted to increase the interactive use of MACS. However, because individual MACS have different features, not all interactive use of individual MACS equally serves to assuage debt pressures. We predict that firms facing high debt pressure interactively use traditional MACS and that when individual MACS use befits the level of debt pressure, firms benefit by experiencing future decreases in their cost of debt. Our findings confirm these predictions. We contribute to the literature by showing that pressures from external stakeholders influence interactive use. We also suggest a new relevant firm outcome affected by MACS use: the future cost of debt. Finally, in additional analyses, we show that concerns over innovation may lead managers to choose apparently non-optimal MACS for interactive use, consistent with managers often juggling conflicting pressures.


  • Business
  • Economics


  • debt pressure; interactive use; management accounting and control systems; cost of debt; innovation; levers of control