PRIVATIZATION AND MANAGEMENT ACCOUNTING SYSTEMS CHANGE: THE CASE OF THE 19TH CENTURY SPANISH TOBACCO MONOPOLY

This paper examines changes to the accounting system of the Spanish tobacco monopoly in 1887, following the decision by the state to lease the publicly owned and state-run monopoly to a private-sector company. The switch to private-sector management generated a fundamental change in the demands made of the accounting system. As a result, double-entry bookkeeping and a new method of calculating costs were implemented. The paper discusses the motives behind the design of the new accounting system and its consequences using the framework provided by agency theory. It highlights the need to consider the role of the capital structure of the firm and the state as explanatory factors for both the parameters and uses of cost accounting information.