Accounting Organizations and Society最新文献

Multidimensional tasks are often characterized by goal conflict as individuals struggle to simultaneously balance and monitor multiple performance goals. Motivated by the recent psychology research on conscious and nonconscious goal pursuit, we hypothesize that conveying the importance of one performance goal consciously while priming the other performance goal nonconsciously will help individuals more effectively pursue multiple performance goals simultaneously and ultimately improve overall task performance. We conduct a laboratory experiment, using a real-effort multidimensional task, to test our hypotheses and find evidence to confirm our predictions. Our research contributes to the scant accounting research on nonconscious processes. It also provides a novel solution to the goal conflict problem in a multidimensional task setting.

This study examines the role of an inventory tracking and accounting system in the creation of a new market for legal cannabis in the US state of Colorado. Inspired by the empirical setting and the work of Deleuze and Guattari, we illuminate different processes associated with the management of flows (of people, aspirations, and things) into, out of, and within the market. Our findings contribute to our understanding of how accounting is implicated in the territorialization of new governable entities. We show how accounting, as a market device, is involved not only in performing economic and other theories, but in populating market spaces with certain elements and not others. Finally, we suggest that our analysis has policy and regulatory implications related to phenomena of contemporary interest such as traceability of global supply chains and the social and economic consequences of tracking and tracing systems.

We investigate how grief following the death of a CEO's former colleague affects management forecasts. Our results show that the death of a former colleague is associated with a transient, one-year increase in the pessimism of management forecasts. This effect is amplified when the CEO exhibits a greater resemblance or stronger attachment to the deceased. Further, we also find that the effect is less pronounced for CEOs who are more equipped to handle the negative emotions. Additional tests show that CEOs issue pessimistic management forecasts at a higher frequency and exhibit more pessimistic tones in speech during conference calls after the death event. Moreover, we find that CEOs make a staged recovery as their pessimism in issuing management forecasts appears to last only about one year. Further analysis reveals that a firm's stock price crash risk significantly decreases following the death event. Overall, this study extends our knowledge of transient factors by showing that grief can affect the bias contained in management forecasts.

Personal ties (e.g., belonging to the same country club) and/or professional ties (e.g., serving on boards together) between the CEO and audit committee members can potentially impair members' objectivity. Additionally, prior research indicates that audit committee member industry expertise enhances financial reporting quality. In an experiment with 342 reasonably informed investors, we find, as hypothesized by Source Credibility Theory (SCT), personal ties negatively impact investors’ assessments of audit committee independence more than professional ties, and industry expertise enhances assessments of competence. We also find investors assess audit committees with no ties and industry expertise (personal ties and no industry expertise) as the most (least) effective and indicate the highest (lowest) likelihood of investing. Further, extending SCT we find the incremental positive effect of industry expertise is greater when there are personal ties than when there are no ties. In a path model, competence and independence assessments directly affect each other, and in turn affect assessments of audit committee effectiveness and investment decisions. Finally, in a second experiment we find reasonably informed investors recognize variations in the nature of personal ties and that industry expertise attenuates the effect of advisory ties but not close friendship ties.

Prior research finds that financial priming (thinking about money) results in leniency toward unethical activities. This research suggests that accountants, because of frequent financial priming, may be prone to overlooking unethical acts. Construal level theory research further suggests that psychologically distant events (also common in accounting) may exacerbate financial priming's effects. Across three experiments, we explore the interactive effect of financial priming, psychological distance, and financial reporting responsibility on recognition of financial misreporting as an ethical issue. Consistent with past research, we find that financially (versus neutrally) primed businesspeople without prior financial reporting responsibility are less likely to recognize psychologically distant financial misreporting as an ethical issue. Importantly, however, we find that financially (versus neutrally) primed accountants and other business professionals with financial reporting responsibility consider psychologically distant financial misreporting to be more unethical. Preliminary process evidence suggests that, when exposed to psychologically distant financial misreporting, financially (versus neutrally) primed businesspeople with financial reporting responsibility focus more on protecting those who rely on accurate financial reports than on protecting the company committing the financial misreporting.

We examine whether auditors' incentives affect materiality assessments of prior-period misstatements. Interviews with global network firm partners reveal consistency across firms in the process used to assess prior-period misstatements and highlight points in the process where judgments are most susceptible to auditors’ conscious or subconscious biases. In related empirical tests, we find that auditors assess misstatements as less material (i.e., misstatements are disclosed less prominently) when auditors face greater engagement risk (comprised of the risk of litigation and reputation loss) or have greater incentives to please important clients. These effects only occur when auditor incentives to avoid further litigation or client losses within an audit office are most salient and when the quantitative magnitude of the misstatement is in a range subject to greater professional judgment. Thus, we identify boundary conditions on the extent to which auditor incentives affect materiality judgments. Finally, additional tests suggest that neither local engagement partners nor professional practice partners are immune from these incentives. Our study should be informative to audit firms when designing and updating quality control structures.

In the creative industries, creative output is often produced in temporary project teams, staffed with employees from within the organization. In this study we make two main contributions regarding the management of creative performance in such teams. First, we provide evidence for a fundamental trade-off inherent in creative teamwork. Team creativity benefits both from high team member autonomy and high task interdependence, but when team leaders give higher autonomy to team members then this undermines the positive effect of a more interdependent design of teamwork on team creativity, and vice versa. Second, we argue that cultural control at the organizational level is an effective means to resolve this team-level trade-off and to enable teams to leverage both high autonomy and high task interdependence for higher team creativity. We test our hypotheses using survey data collected at three different organizational levels (team members, team leaders, and agency heads) from 372 individuals of 101 temporary project teams within 53 advertising agencies, and find evidence consistent with our predictions.

Prior research has shown that that management control practices change in response to global crises, yet we have little understanding of the behavioral consequences of these changes. The purpose of this study is to explore the behavioral effects that stem from crisis-induced changes to management control practices and the factors that intensify or diminish these effects. Using survey data from business unit managers in the Netherlands, our results show that firms tighten their budget controls in response to a negative impact of Covid-19. In turn, the tightening of budget controls is positively associated with employees' emotional exhaustion because of increased perceptions of role ambiguity and role conflict. We furthermore find that the effect of tighter budget controls on role ambiguity is mitigated when managers perceive that the budget controls are used in an enabling way prior to the crisis but heightened with increased trust in senior management. These results suggest that if firms use their budgets to help managers acquire a deeper understanding of their tasks and responsibilities, they are better able to respond to a negative shock and the accompanying tightening of budget controls, which helps mitigate the undesired behavioral response of increased role ambiguity and emotional exhaustion. Our findings also suggest that trust, which usually is beneficial to organizations, has a ‘dark’ side in that managers will push themselves harder to reciprocate the trust they have in their senior managers, which exacerbates the effect of tighter budget controls on role ambiguity and, in turn, emotional exhaustion.

Corporate managers display varying degrees of confidence, but investors appear to have difficulty distinguishing when management's high confidence is warranted (i.e., when it signals accuracy and/or future positive outcomes). Archival research finds that the managers associated with proxies for high confidence are actually “overconfident” because their choices ultimately resulted in personal and shareholder losses, on average. Auditors are experienced in evaluating management and are trained to be professionally skeptical, and users rely on them to reduce the information risk around noisy signals in financial reporting. Therefore, we investigate whether and how management confidence impacts auditors' response to the risk of material misstatement (RMM). Audit standards are explicit that auditors should increase testing and acquire more reliable evidence as RMM increases. Accordingly, we conduct an experiment, varying management confidence in their explanations about an accounting estimate and RMM at the client. We find, consistent with the thought-suppression literature, that although auditors universally believe relying on management's explanations without corroboration is inappropriate and that high confidence signals management's desire to induce auditor reliance, they do not distinguish their response to RMM when management confidence is high. When management confidence is low, auditors appropriately perform more testing for clients where RMM is higher than lower. Auditors' testing judgements moderate their likelihood of pursuing inquiry evidence for higher than lower risk clients when management confidence is high versus when it was low. Our finding is troublesome because deceitful managers can readily manipulate confidence and influence the explanations and inquiry evidence presented to auditors. Thus, our research offers evidence that auditors' tendency to be influenced by high management confidence can play a contributing role in the observed association between high management confidence and biased financial reporting.

Activist short sellers (AShSs) and financial analysts are information intermediaries who analyze firm disclosures as well as produce and disseminate influential investment narratives. This study aims to better understand narrative challenges surrounding the legitimate expertise of financial analysts. Specifically, we examine how AShSs challenge sell-side financial analysts' narrative authority (i.e., the perception that they produce expert knowledge) in interpreting firms' performance and future prospects. We investigate how analysts respond (or do not respond) to this challenge. We use 442 AShS reports, 12 interviews with AShSs and analysts, and analysts' stock recommendations and target prices. In their criticisms of analysts (found in one-third of reports), AShSs frequently frame analysts as lacking market expertise and critical thinking – two core dimensions of analysts' narrative authority. Sixty-six percent of analysts, although explicitly criticized in AShS reports, do not engage in written responses in their equity research reports because they reportedly either adopt a renunciation attitude to the challenge or they engage in off-the-record discussions with certain market participants. However, 34% of analysts respond overtly by counter-framing AShSs as lacking market expertise and objectivity. After the dissemination of AShS reports, analysts, on average, do not revise their highly visible stock recommendations but they revise target prices downward. Theoretically, this study extends our understanding of the construction of narrative authority in capital markets as we examine a challenge to the expertise of influential information intermediaries.