ABSTRACT We examine how subjective performance evaluations are influenced by the level and controllability of an accompanying measure a separate dimension. In our experiment, supervisors evaluate office administration hypothetical subordinate. find that supervisors' directionally objective sales performance, even after excluding participants who perceive informativeness across measures. Consistent with concerns for fairness motivation, we also asymmetric uncontrollability effect—supervisors'...

Two alternative approaches are used in audit practice to provide quantitative materiality assessments about proposed adjustments. The cumulative approach compares net income the total amount of misstatement existing at end current period, while current-period added period. Depending on relation between and misstatement, either or can calculate higher materiality. This paper reports an experiment that varies auditors by providing with formats their firm summarize Results indicate that, across...

Discretionary bonus adjustments allow managers to restore the alignment of employee effort and compensation when amounts are based on noisy objective performance measures. We examine joint influence likelihood future negative uncontrollable events interdependence (i.e., extent which one employee’s influences others’ bonuses) managers’ willingness make for effect a event. In our experiment, we manipulate whether bonuses determined individually or drawn from shared pool. Results show that, is...

SYNOPSIS Previous research finds that individuals place more weight on information when they choose to obtain it than acquire the same without explicit choice. We examine whether litigation risk and auditor experience influence auditors' susceptibility choice effect, which has potential implications for audit effectiveness efficiency. In our experiment, auditors evaluate likelihood of an inventory obsolescence issue a hypothetical client. find in high setting, less experienced exhibit...

This descriptive study evaluated the presence of bulimic weight-loss behaviors in individuals enrolled in: (1) a military weight-management program (N = 51); (2) civilian 53); and (3) comparison (military normal-weight) group 51). A modified version Stanford Eating Disorders Questionnaire was administered to all subjects. The results indicated that reported they engaged two five times more often than group, vomiting, strenuous exercise, or use sauna/steam room four as group. suggest may...

ABSTRACT This paper examines how users' understanding of the financial statement impact accounting alternatives and disclosure choices management has made jointly influence assessments credibility investment risk. Specifically, in a lease obligation setting, management's reporting choice (i.e., recognition versus disclosure), presence supplemental reconciliation from to recognition, source that (as company or an independent analyst) are manipulated. As predicted, findings indicate users...

ABSTRACT We experimentally examine the effects of difficult goals and controllability on managerial honesty in a cost reporting setting. In our experiment, participants role production managers make decisions with economic incentives to over-report. manipulate presence goal whether perceive product costs as somewhat under their control. Our setting captures conflicting achievement perquisite consumption, we find that do increase conditional perceived ability impact costs. Specifically,...

Two alternative approaches are used in audit practice to make quantitative materiality assessments about proposed adjustments: the cumulative approach compares net income total amount of misstatement existing at end current period, while current-period added period. The Panel on Audit Effectiveness and SEC have expressed concern that these could affect auditor judgments, but no research has investigated this question. We report results an experiment which 234 managers partners from one Big 4...

Firms can effectively take long or short positions on their own equity by holding treasury shares, contributing shares to pension fund, write put call options stock, compensate employees with stock options, invest in other entities (e.g., firms, indexes) that hold of stock. In each these circumstances, fair value accounting methods allow firms report "self-generated" unrealized gains losses ("UGLs").

ABSTRACT We examine how the alignment of performance measurement and strategy affects on a multidimensional task. Our experiment varies both (speed versus accuracy) hypothetical firm for which participants work individual measure that is reported to them, creating two conditions clear misalignment. find although workers are responsive regardless its alignment, they also sensitive such costly effects observed. predict respond asymmetrically misalignment in accuracy but not speed performance,...

Prior research indicates that individuals hold an implicit theory about what it means to make rational or reasonable judgments and decisions. We examine whether providing non-binding firm guidance decisions in ways influences consistent with theory. conduct two experiments modeled after well-known prior management accounting. First, a resource allocation setting, we predict find employees provided report reasonably misreport less than those no such guidance, even though the formal control...

The alignment of a firm's performance measurement system and its strategic objectives is fundamental to management control, at least in part because measures stated strategy represent separate sources information that workers can rely on guide their efforts. We experimentally examine the effects clarity (i.e., specificity with which are communicated) workers' multidimensional production task. find significant disordinal interaction worker – improves under vague statement but impairs clear...

Previous research finds that individuals place more weight on information when they choose to obtain it than acquire without explicit choice. We examine whether litigation risk and auditor experience influence auditors’ susceptibility this choice effect. In our experiment, participants evaluate the likelihood of an inventory obsolescence issue for a hypothetical client subsidiary. find in high setting, less-experienced auditors heavily do who same Further, we predict choosing are confident...

The use of shadow IT (information technology systems not sanctioned or monitored by a company’s department) may be seen as either form organizational misbehavior proactive and creative problem-solving. We examine whether these differing possible perceptions have implications for the subjective evaluation subordinate performance. In our experiment, participants choose to award bonus an employee when different are used (normal vs. IT) across outcome levels (high low outcomes). find that...