Honesty and Management Control System Design: An Experimental Study
AbstractThe manipulation of performance measures is a central theme in management accounting research. Individuals have private information that can be used for their own benefit; and thus they can falsify their performance reporting. Psychology literature asserts that the attitude of individuals to maximize their own interests or common benefits depends on their cognitive orientation. Accounting literature argues that management control systems can motivate individuals to act for the organization benefit. This paper analyzes how management control systems (beliefs system vs. boundary system) and cognitive orientation of individuals affect honesty in performance reporting. Hypotheses were tested using an experiment among post-graduate students. Results showed that a boundary design of management control systems moderates the negative relationship between the individualist cognitive orientation and the honesty in performance reporting.
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Bibliographic InfoPaper provided by Universidad Pablo de Olavide, Department of Financial Economics and Accounting (former Department of Business Administration) in its series Working Papers with number 12.05.
Length: 34 pages
Date of creation: Jul 2012
Date of revision:
Honesty; management control system design and cognitive orientation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
- NEP-EXP-2012-08-23 (Experimental Economics)
- NEP-NEU-2012-08-23 (Neuroeconomics)
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