Firms frequently provide relative performance information (RPI) in different environmental contexts. In this experimental study, we investigate how RPI (absent versus present) affects rule-breaking under different levels of group identity (lower versus higher). We refer to performance-improving rule-breaking that increases not only one’s own performance but also overall firm performance. We predict and find that RPI triggers a stronger increase in rule-breaking in cases of higher group identity than in cases of lower group identity. We argue that in the case of lower group identity, individuals mainly follow their own moral standards independently of RPI provision. In contrast, we reason that individuals with higher group identity generally want to impress their fellow group members when RPI is absent by following the rules, but when RPI is present by achieving a high rank through rule-breaking. Our results inform managers about the importance of considering RPI in conjunction with group identity. Data Availability: Data are available from Sandra Winkelmann. JEL Classifications: M40; M41.
{"title":"Relative Performance Information and Rule-Breaking: The Moderating Effect of Group Identity","authors":"Corinna Ewelt-Knauer, Thorsten Knauer, Sandra Winkelmann","doi":"10.2308/bria-2022-049","DOIUrl":"https://doi.org/10.2308/bria-2022-049","url":null,"abstract":"\u0000 Firms frequently provide relative performance information (RPI) in different environmental contexts. In this experimental study, we investigate how RPI (absent versus present) affects rule-breaking under different levels of group identity (lower versus higher). We refer to performance-improving rule-breaking that increases not only one’s own performance but also overall firm performance. We predict and find that RPI triggers a stronger increase in rule-breaking in cases of higher group identity than in cases of lower group identity. We argue that in the case of lower group identity, individuals mainly follow their own moral standards independently of RPI provision. In contrast, we reason that individuals with higher group identity generally want to impress their fellow group members when RPI is absent by following the rules, but when RPI is present by achieving a high rank through rule-breaking. Our results inform managers about the importance of considering RPI in conjunction with group identity.\u0000 Data Availability: Data are available from Sandra Winkelmann.\u0000 JEL Classifications: M40; M41.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"172 4","pages":""},"PeriodicalIF":2.1,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139395592","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
D. Kip Holderness, Kari Joseph Olsen, Todd A. Thornock
ABSTRACT Managers often encourage employee effort by incentivizing employees to achieve performance targets. This paper examines the effect of employee effort on counterproductive work behaviors when those employees ultimately fail to meet specified performance targets. We conduct an experiment in which participants receive a bonus for meeting a challenging performance target in a real-effort task. We find that for individuals who fail to meet the performance target, greater effort is correlated with both an increased propensity toward noncompliant behavior and an increase in misreporting. Our results identify potential drawbacks of incentivizing employee effort when that effort may not translate into greater performance outcomes. Data Availability: Data available upon request. JEL Classifications: M40; M41.
{"title":"I’m Working Hard, but It’s Hardly Working: The Consequences of Motivating Employee Effort That Fails to Achieve Performance Targets","authors":"D. Kip Holderness, Kari Joseph Olsen, Todd A. Thornock","doi":"10.2308/bria-2022-035","DOIUrl":"https://doi.org/10.2308/bria-2022-035","url":null,"abstract":"ABSTRACT Managers often encourage employee effort by incentivizing employees to achieve performance targets. This paper examines the effect of employee effort on counterproductive work behaviors when those employees ultimately fail to meet specified performance targets. We conduct an experiment in which participants receive a bonus for meeting a challenging performance target in a real-effort task. We find that for individuals who fail to meet the performance target, greater effort is correlated with both an increased propensity toward noncompliant behavior and an increase in misreporting. Our results identify potential drawbacks of incentivizing employee effort when that effort may not translate into greater performance outcomes. Data Availability: Data available upon request. JEL Classifications: M40; M41.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135663735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mackenzie M. Festa, Megan M. Jones, Patrick D. Witz
ABSTRACT This study contributes to the literature examining the benefits and costs associated with auditor quantitative materiality disclosures. We conduct an experiment to examine a conditional risk associated with such disclosures: that investors with heightened concerns about earnings management, a qualitative concern, will anchor too strongly to the quantitative threshold and lose trust in the audit. The experiment manipulates (1) whether investor concerns about earnings management are low or high and (2) whether auditors provide a quantitative materiality disclosure. We find that quantitative materiality disclosures mislead investors when they have high concerns about earnings management. Specifically, investors lose trust in the auditor’s ability to identify errors that are quantitatively small, but important from a qualitative perspective. A second experiment further suggests that auditors’ provision of detailed, rather than nominal, qualitative materiality disclosures can mitigate this conditional risk. Our study contributes to practice and literature on financial disclosure, materiality, and investor behavior. Data Availability: Data are available from the authors upon request.
{"title":"Auditor Materiality Disclosures and Investor Trust: How to Address Conditional Risks of Disclosure Mandates","authors":"Mackenzie M. Festa, Megan M. Jones, Patrick D. Witz","doi":"10.2308/bria-2023-010","DOIUrl":"https://doi.org/10.2308/bria-2023-010","url":null,"abstract":"ABSTRACT This study contributes to the literature examining the benefits and costs associated with auditor quantitative materiality disclosures. We conduct an experiment to examine a conditional risk associated with such disclosures: that investors with heightened concerns about earnings management, a qualitative concern, will anchor too strongly to the quantitative threshold and lose trust in the audit. The experiment manipulates (1) whether investor concerns about earnings management are low or high and (2) whether auditors provide a quantitative materiality disclosure. We find that quantitative materiality disclosures mislead investors when they have high concerns about earnings management. Specifically, investors lose trust in the auditor’s ability to identify errors that are quantitatively small, but important from a qualitative perspective. A second experiment further suggests that auditors’ provision of detailed, rather than nominal, qualitative materiality disclosures can mitigate this conditional risk. Our study contributes to practice and literature on financial disclosure, materiality, and investor behavior. Data Availability: Data are available from the authors upon request.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136129423","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mary E. Marshall, Jonathan M. Farrar, Dawn W. Massey, Linda Thorne, Anita Wu, Trang Bui
ABSTRACT We conduct a meta-analysis of the tax fairness–tax compliance literature from its inception in 1976 through 2021. We use an organizational justice perspective (Colquitt 2001) to differentiate between the dimensions of fairness that dominate tax fairness research. We find that the aggregate effect size of the fairness-compliance association is positive and of medium strength. We also find that distributive fairness has the strongest effect on taxpayers’ compliance and is largely driven by the subdimension of exchange equity. Other dimensions of fairness, namely, interactional (interpersonal and informational) and procedural, have smaller effect sizes. We also find a moderating effect of methodology. Our findings suggest both the importance of ensuring that tax dollars are used in ways that taxpayers value, while downplaying the effect of interactional aspects of tax administration, and the importance of carefully considering methodology when conducting tax fairness research.
{"title":"In All Fairness: A Meta-Analysis of the Tax Fairness–Tax Compliance Literature","authors":"Mary E. Marshall, Jonathan M. Farrar, Dawn W. Massey, Linda Thorne, Anita Wu, Trang Bui","doi":"10.2308/bria-2022-040","DOIUrl":"https://doi.org/10.2308/bria-2022-040","url":null,"abstract":"ABSTRACT We conduct a meta-analysis of the tax fairness–tax compliance literature from its inception in 1976 through 2021. We use an organizational justice perspective (Colquitt 2001) to differentiate between the dimensions of fairness that dominate tax fairness research. We find that the aggregate effect size of the fairness-compliance association is positive and of medium strength. We also find that distributive fairness has the strongest effect on taxpayers’ compliance and is largely driven by the subdimension of exchange equity. Other dimensions of fairness, namely, interactional (interpersonal and informational) and procedural, have smaller effect sizes. We also find a moderating effect of methodology. Our findings suggest both the importance of ensuring that tax dollars are used in ways that taxpayers value, while downplaying the effect of interactional aspects of tax administration, and the importance of carefully considering methodology when conducting tax fairness research.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"103 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135662928","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT Accounting conservatism has been described as deriving from preferences for reporting errors to be in the direction of understatement rather than overstatement. We pair reporters with users (who rely on reporters’ information) in a multiperiod experiment. We posit that, under misaligned incentives that motivate aggressive reporting, users view aggressive reports as reflecting exploitative intent and expect that a norm prohibiting aggressive reporting applies. We predict that users use noisy reporting errors to gauge reporters’ norm compliance. We find that, ceteris paribus, users prefer not to be paired with reporters producing overstatement errors likely to reflect aggressive reporting relative to reporters producing understatement errors likely to reflect conservative reporting; alternatively, we find no such asymmetric preferences when the agents’ motives are aligned. The asymmetric preferences cannot be explained by agency theory predictions of payoff maximization or loss aversion. These moral preferences provide an initial condition from which conservatism can endogenously emerge. Data Availability: Data are available from the authors upon request. JEL Classifications: B52; D81; D82; M41.
{"title":"The Conservatism Principle and Asymmetric Preferences over Reporting Errors","authors":"Jivas Chakravarthy, Timothy W. Shields","doi":"10.2308/bria-2023-003","DOIUrl":"https://doi.org/10.2308/bria-2023-003","url":null,"abstract":"ABSTRACT Accounting conservatism has been described as deriving from preferences for reporting errors to be in the direction of understatement rather than overstatement. We pair reporters with users (who rely on reporters’ information) in a multiperiod experiment. We posit that, under misaligned incentives that motivate aggressive reporting, users view aggressive reports as reflecting exploitative intent and expect that a norm prohibiting aggressive reporting applies. We predict that users use noisy reporting errors to gauge reporters’ norm compliance. We find that, ceteris paribus, users prefer not to be paired with reporters producing overstatement errors likely to reflect aggressive reporting relative to reporters producing understatement errors likely to reflect conservative reporting; alternatively, we find no such asymmetric preferences when the agents’ motives are aligned. The asymmetric preferences cannot be explained by agency theory predictions of payoff maximization or loss aversion. These moral preferences provide an initial condition from which conservatism can endogenously emerge. Data Availability: Data are available from the authors upon request. JEL Classifications: B52; D81; D82; M41.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135938442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-01DOI: 10.2308/1050-4753-35.2.e
{"title":"Editorial Policy","authors":"","doi":"10.2308/1050-4753-35.2.e","DOIUrl":"https://doi.org/10.2308/1050-4753-35.2.e","url":null,"abstract":"","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135588379","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-01DOI: 10.2308/1050-4753-35.2.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/1050-4753-35.2.i","DOIUrl":"https://doi.org/10.2308/1050-4753-35.2.i","url":null,"abstract":"","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135588378","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Eric N. Johnson, Philip M. J. Reckers, Mackenzie M. Festa
ABSTRACT This study demonstrates that perceived accounting information reliability is biased by the information user’s assessments of the information provider’s narcissism as well as the user’s own narcissism levels. We examine the specific subtypes of user narcissism driving these biases. Ninety-nine business professionals acting as information users read a simulated interview with an information provider (a corporate accountant) focused on a possible revenue misstatement and then assessed the perceived reliability of the information. We also examined the influence of perceived provider communion on reliability assessments. Consistent with narcissistic tolerance, information reliability assessments were higher when both the user and provider were higher in agentic narcissism. Consistent with narcissistic hypocrisy, assessments were lower when both the perceiver and provider were higher in antagonistic narcissism. Also, perceived provider communion was positively associated with reliability assessments. We discuss the theoretical and practical significance of these findings for future management accounting research and practice. Data Availability: Data are available from the first author. JEL Classifications: M41.
{"title":"Narcissism, Communion, and Perceptions of Accounting Information Source Reliability","authors":"Eric N. Johnson, Philip M. J. Reckers, Mackenzie M. Festa","doi":"10.2308/bria-2022-047","DOIUrl":"https://doi.org/10.2308/bria-2022-047","url":null,"abstract":"ABSTRACT This study demonstrates that perceived accounting information reliability is biased by the information user’s assessments of the information provider’s narcissism as well as the user’s own narcissism levels. We examine the specific subtypes of user narcissism driving these biases. Ninety-nine business professionals acting as information users read a simulated interview with an information provider (a corporate accountant) focused on a possible revenue misstatement and then assessed the perceived reliability of the information. We also examined the influence of perceived provider communion on reliability assessments. Consistent with narcissistic tolerance, information reliability assessments were higher when both the user and provider were higher in agentic narcissism. Consistent with narcissistic hypocrisy, assessments were lower when both the perceiver and provider were higher in antagonistic narcissism. Also, perceived provider communion was positively associated with reliability assessments. We discuss the theoretical and practical significance of these findings for future management accounting research and practice. Data Availability: Data are available from the first author. JEL Classifications: M41.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134915126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT Accountability research in auditing has spanned several decades, highlighting its importance in better understanding auditors’ judgments and decision-making processes. This study provides a systematic review of experimental audit research on accountability. We identify how previous research findings relate to theory, offer design considerations for future research, and provide future research opportunities. Relevant research was identified utilizing two databases. After removing duplicate records and applying exclusion criteria, a final population of 47 manuscripts is included in this review. We find that prior research results largely align with Tetlock’s social contingency model of accountability. This research stream is ripe with opportunities to enhance our understanding of accountability in auditing. Avenues for future research include investigating auditors’ responses to multiple accountability pressures, developing a measure of accountability, better understanding accountability in a post-COVID work environment, and considering ways to improve audit quality by shifting from a punitive to a more rewards-based system. Data Availability: The data that support the findings of this study are available from the database sources cited in the text.
{"title":"A Systematic Review of Experimental Research on Accountability in Auditing","authors":"Amy M. Donnelly, David P. Donnelly","doi":"10.2308/bria-2021-050","DOIUrl":"https://doi.org/10.2308/bria-2021-050","url":null,"abstract":"ABSTRACT Accountability research in auditing has spanned several decades, highlighting its importance in better understanding auditors’ judgments and decision-making processes. This study provides a systematic review of experimental audit research on accountability. We identify how previous research findings relate to theory, offer design considerations for future research, and provide future research opportunities. Relevant research was identified utilizing two databases. After removing duplicate records and applying exclusion criteria, a final population of 47 manuscripts is included in this review. We find that prior research results largely align with Tetlock’s social contingency model of accountability. This research stream is ripe with opportunities to enhance our understanding of accountability in auditing. Avenues for future research include investigating auditors’ responses to multiple accountability pressures, developing a measure of accountability, better understanding accountability in a post-COVID work environment, and considering ways to improve audit quality by shifting from a punitive to a more rewards-based system. Data Availability: The data that support the findings of this study are available from the database sources cited in the text.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":"60 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135830116","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. Schwebke, William D. Brink, V. Hansen, Charles F. Kelliher
We examine the effect of social influence on individuals’ likelihood of using an IRS pre-populated tax return system and the effects of social influence and filing method on individual taxpayer compliance. Our experiment manipulates social influence about the IRS pre-populated return system and the IRS itself (unfavorable or favorable) as well as filing method (IRS pre-populated return or IRS blank tax software) for a simulated tax return. Consistent with social influence theory, results indicate public opinion influences individuals’ likelihood of using an IRS pre-populated tax return system. Additionally, consistent with omission bias theory and prior research, individuals who use the IRS pre-populated return system are less compliant. Finally, favorable social influence mitigates the noncompliant behavior exhibited during the use of pre-populated returns when public opinion about both the pre-populated system and the IRS is favorable.
{"title":"Pre-Populated Tax Returns: Individual Taxpayer Adoption and the Effect on Compliance","authors":"J. Schwebke, William D. Brink, V. Hansen, Charles F. Kelliher","doi":"10.2308/bria-2022-018","DOIUrl":"https://doi.org/10.2308/bria-2022-018","url":null,"abstract":"\u0000 We examine the effect of social influence on individuals’ likelihood of using an IRS pre-populated tax return system and the effects of social influence and filing method on individual taxpayer compliance. Our experiment manipulates social influence about the IRS pre-populated return system and the IRS itself (unfavorable or favorable) as well as filing method (IRS pre-populated return or IRS blank tax software) for a simulated tax return. Consistent with social influence theory, results indicate public opinion influences individuals’ likelihood of using an IRS pre-populated tax return system. Additionally, consistent with omission bias theory and prior research, individuals who use the IRS pre-populated return system are less compliant. Finally, favorable social influence mitigates the noncompliant behavior exhibited during the use of pre-populated returns when public opinion about both the pre-populated system and the IRS is favorable.","PeriodicalId":46356,"journal":{"name":"Behavioral Research in Accounting","volume":" ","pages":""},"PeriodicalIF":2.1,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49049230","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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