Accounting changes that take place in the context of different leadership styles, especially in SMEs, require further investigation. This paper aims to explore how accounting enhances monitoring and control for legalistic leaders and how accounting changes facilitate leadership transition to resolve accounting issues and emotional conflicts within entrepreneurial firms.
This paper adopts a case study in a Chinese entrepreneurial firm to explore the relationship between accounting changes and leadership behaviours rooted in the traditional Chinese philosophies.
Legalistic leaders enhance monitoring and control, through the flow and interpretation of accounting information, to retain power. However, rule-based accounting order, with rewards and punishment, may create emotional conflicts. The difficulties of implementing accounting changes facilitate legalistic leaders to embrace transformational leadership to resolve trust, emotional conflicts and accounting issues.
This paper provides insights into the transition of leadership styles in the process of implementing accounting changes in the Chinese context, which contributes to future comparative leadership and accounting practices with Western philosophies.
