Project Escalation and Sunk Costs: A test of the International Generalizability of Agency and Prospect Theories

The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region

“…Cross-cultural studies in management accounting suggest that national culture may affect the design and the use of management control systems, managersÕ values, and their decision making (e.g., Chow et al, 2000). Some studies find that the national cultures of managers within multinational companies may affect such managersÕ project continuation decisions (Chow et al, 1997;Salter and Sharp, 2001;Sharp and Salter, 1997). For example, Sharp and Salter (1997) find that the agency effect (adverse selection situations) was insignificant for their Asian sample (Hong Kong and Singapore), yet highly significant in North America (U.S. and Canada).…”

“…Some studies find that the national cultures of managers within multinational companies may affect such managersÕ project continuation decisions (Chow et al, 1997;Salter and Sharp, 2001;Sharp and Salter, 1997). For example, Sharp and Salter (1997) find that the agency effect (adverse selection situations) was insignificant for their Asian sample (Hong Kong and Singapore), yet highly significant in North America (U.S. and Canada). In addition, Salter and Sharp (2001) find a strong effect of national culture, given an apparently small culture difference (i.e., U.S.A. and Canada), on how well agency theory can explain managersÕ project continuance decisions.…”

Leximin

“…In collectivist cultures, society itself imposes significantly higher costs -such as censure or ostracization -on individuals who violate collective norms by acting in their own interests rather than of the in-group (Sharp & Salter 1997). Lhuillery (2006) finds that firms with corporate governance practices that are shaped in order to defend shareholders' rights are more R&D intensive.…”

Risk-taking in new project selection: Additive effects of bonus incentives and past performance history

“…In the accounting literature, Harrell (1993, 1994) and Sharp and Salter (1997) have provided support for prospect theory in their study of escalation-of-commitment, while Luft (1994) has demonstrated its applicability to employees' choice of bonus schemes. Drake and Haka (2008) use prospect theory to predict that managers negotiating in a buyer-supplier context will be relatively more willing to share proprietary cost information when they are operating under loss conditions than under profit conditions.…”