The Effect of Individual and Pooled Profit Sharing Plans on Honesty in Managerial Reporting

Boster, Charles R.; Majerczyk, Michael; Yu, Tian

doi:10.1111/1911-3846.12400

Cited by 10 publications

(3 citation statements)

References 50 publications

(141 reference statements)

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“…Research on moral disengagement and licensing suggests that individuals have an easier time rationalizing and justifying questionable behavior when it benefits others, and are thus more likely to engage in that behavior (Bandura et al 1996; Dana et al 2007; Erat and Gneezy 2012; Gino et al 2013; Cain et al 2014). Consistent with this notion, research in accounting finds that individuals may report private information less honestly when doing so benefits others (Church et al 2012; Maas and Van Rinsum 2013; Boster et al 2018).…”

Section: Background and Hypothesesmentioning

confidence: 94%

The Effects of Openness of Internal Reporting and Shared Interest with an Employee on Managerial Collusion and Subsequent Cooperation*

Way

2022

Contemporary Accting Res

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Collusion between managers who share private information represents a significant control concern for firms. Prior research suggests that mutual monitoring contracts that incentivize honest reporting do not prevent all collusion, making it important to understand how elements of the control environment may facilitate collusion, as well as how control choices-and collusion itself-affect subsequent behavior within the firm. Results of two experiments show that the frequency of collusion between managers in a repeated-interaction setting is greatest when one can view the other's reports before making their own ("open internal reporting") and slack obtained from misreporting is shared with a non-reporting employee ("shared interest"). Moreover, although open (versus closed) internal reporting increases collusion in a single-shot setting with or without a residual claimant to managers' budget reports being present, neither openness alone nor shared interest alone increases collusion in a repeated-interaction setting. Results further suggest that collusion improves managers' perceptions of autonomy and group identification, resulting in greater cooperation on a subsequent task and potentially reducing the costs of some collusion to the extent such cooperation benefits the firm. Finally, open internal reporting worsens managers' perceptions of autonomy and group identification which, for managers who did not previously engage in collusion, leads to less cooperation on a subsequent task. In total, these results highlight to firms that the costs of collusion in repeated-interaction settings frequently found in practice may be greatest when the common control choices of open internal reporting and shared interest are made in tandem, and that open internal reporting may carry another unintended cost in the form of lower cooperation on other tasks.

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Section: Background and Hypothesesmentioning

confidence: 94%

The Effects of Openness of Internal Reporting and Shared Interest with an Employee on Managerial Collusion and Subsequent Cooperation*

Way

2022

Contemporary Accting Res

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“…When a pooled profitsharing plan is present, participants receive their fixed salary plus 5% of the pooled profits of all three divisions in their organization (i.e., the organization's profit). In line with Boster et al [20], we design the pooled profit-sharing plan in such a way that dishonest reporting still maximizes the participants' payoffs. Finally, participants in all conditions can sanction other participants in each period.…”

Section: Designmentioning

confidence: 99%

Combining Experiments with Agent-Based Modeling: Benefits for Experimental Management Accounting Research

Plähn,

Bellora-Bienengräber,

Mertens

et al. 2023

Springer Proceedings in Complexity

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Laboratory experiments are among the most frequently used methods in management accounting research because they offer high internal validity, enabling the examination of causal relationships. However, experiments often struggle with providing support for a specific proposed causal mechanism, given the abundance of psychological and behavioral theories that predict similar outcomes. In this paper, we argue that agent-based modeling is well suited to complement experiments because agent-based modeling is a powerful method to increase confidence in the proposed causal mechanism. As a showcase project, we conduct an experiment to explain antecedents of honest reporting behavior in a participative budgeting setting and propose that a social norm of honesty is the underlying causal mechanism. Next, we adapt an agent-based model to our participative budgeting setting and create two submodels incorporating alternative causal mechanisms. Finally, we assess the capability of the two submodels to reproduce the experiment's results to evaluate whether the observed behavior in the experiment can be better explained with the causal mechanism representing social norm theory.

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“…Während diese Form von Gruppenbelohnungen zumeist auf Teamlevel stattfindet, stellen auch unternehmensweite Gewinnbeteiligungen und Employee Stock Option-Programme im Prinzip eine Form von Cultural Controls dar (Core und Guay 2001;Kroumova und Sesil 2006). Zu deren Auswirkungen auf das Mitarbei-terInnenverhalten gibt es bisher allerdings erst wenige empirische Untersuchungen (Hales et al 2015;Boster et al 2018).…”

Section: Cultural Controlsunclassified

Empirische Forschung zu Management Control – Ein Überblick und neue Trends

Feichter

Grabner

2020

Schmalenbachs Z betriebswirtsch Forsch

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Zusammenfassung Unternehmen verwenden Management Control Systeme, um die Strategie zu implementieren und sicherzustellen, dass MitarbeiterInnen im Sinne des Unternehmens handeln. Diese umfassen sowohl formale Steuerungsmechanismen (z. B. Anreiz-und Monitoring-Systeme), als auch informelle Steuerungsmechanismen (z. B. MitarbeiterInnenselektion und Unternehmenskultur). In diesem Beitrag geben wir einen Überblick zum aktuellen Stand der empirischen Management Control Forschung und besprechen diese anhand dreier Literaturströmungen. Im ersten Teil beschreiben wir welche Steuerungsmechanismen zur Verfügung stehen und was die Management Control Forschung bisher dazu erarbeitet hat. Darauf aufbauend beschreiben wir im zweiten Teil den sogenannten Kontingenzansatz, in dem untersucht wird, wie der Unternehmenskontext die Anwendung und Wirkung der Steuerungsmechanismen beeinflusst. Im dritten Teil gehen wir schließlich auf Interdependenzen zwischen den Steuerungsmechanismen ein. In jedem dieser Teile wird auf bestehende Forschungslücken hingewiesen. Im letzten Teil des Beitrags wird schließlich ein Ausblick darüber gegeben, wie der Trend hin zur Wissensgesellschaft sowie zur künstlichen Intelligenz und Big Data die Management Control Forschung zukünftig prägen wird.

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The Effect of Individual and Pooled Profit Sharing Plans on Honesty in Managerial Reporting

Cited by 10 publications

References 50 publications

The Effects of Openness of Internal Reporting and Shared Interest with an Employee on Managerial Collusion and Subsequent Cooperation*

The Effects of Openness of Internal Reporting and Shared Interest with an Employee on Managerial Collusion and Subsequent Cooperation*

Combining Experiments with Agent-Based Modeling: Benefits for Experimental Management Accounting Research

Empirische Forschung zu Management Control – Ein Überblick und neue Trends

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