Behavioral Research in Accounting


Volume 17

A publication of the Accounting, Behavior and Organizations Section
of the American Accounting Association

Table of Contents

• A theoretical framework of the relationship between public accounting firms and their auditors
Elizabeth Dreike Almer, Julia L. Higgs, and Karen L. Hooks

• Does “political bias” in the DIT or Dit-2 threaten validity in studies of CPAs?
Charles D. Bailey, Thomas J. Phillips, Jr., and Stephen B. Scofield (Deceased)

• Relative weighting of common and unique balanced scorecard measures by knowledgeable decision makers
William N. Dilla and Paul John Steinbart

• Alternative measures of managers’ performance, controllability and the outcome effect
Dipankar Ghosh

• Eliciting experts’ context knowledge with theory-based experiential questionnaires
Michael Gibbins and Sandy Q. Qu*

• Accountants’ commitment to their profession: Multiple dimensions of professional commitment and opportunities for future research
Mathew Hall, David Smith, and Kim Langfield-Smith

• Antecedents and consequences of quality performance
Adam S. Maiga and Fred A. Jacobs

• 20-F reconciliations and investors’ perceptions of risk, financial performance and quality of accounting principles
James J. Maroney and Ciarán Ó hÓgartaigh

• Decision aids and experiential learning
Jacob M. Rose

• The role of social influences in using accounting performance information to evaluate subordinates: A causal attribution approach
Yin Xu and Brad Tuttle

• Analysis of diagnostic tasks in accounting research using signal detection theory
Robert J. Ramsay and Richard M. Tubbs

* Commissioned by S. Kaplan

A Theoretical Framework of the Relationship Between
Public Accounting Firms and Their Auditors

Elizabeth Dreike Almer
Portland State University

Julia L. Higgs and Karen L. Hooks
Florida Atlantic University

ABSTRACT: The behavior of auditors in the context of their employment by public accounting firms has received significant attention in the accounting literature. The current article extends this literature by providing a framework identifying what auditing professionals contribute and receive as a result of their work efforts, as well as related influences. Using agency theory modified with fundamental ideas from the sociology of professions literature, we develop a model of the auditor-public accounting firm employment relationship. This framework is grounded in a timely, contextually rich description of the public accounting work environment, and the pressures and incentives faced by auditors. Propositions for future research are suggested that arise from understanding the auditor-firm relationship.

Does “political bias” in the DIT or DIT-2 threaten validity in studies of CPAs?

Charles D. Bailey
University of Memphis

Thomas J. Phillips, Jr.
Louisiana Tech University

Stephen B. Scofield

ABSTACT: The Defining Issues Test (DIT) has been popular among accounting researchers, and will surely find continued applications. The DIT-2 is still new to accounting research. Fisher and Sweeney (1998, 2002) and Sweeney and Fisher (1998, 1999) build upon other critical research to claim that the DIT P-score is a preference measure strongly related to political beliefs. Experimental subjects, when asked to respond from an “extremely liberal” perspective or to “identify the statements designed to represent the highest levels of moral judgment,” tend to respond differently than under official DIT instructions. However, Rest et al. (1999) reject this approach to validity testing, claiming that appropriate tests should address the variance explained over and above other constructs. Based on random samples of CPAs in public accounting practice (741 taking the DIT in 1995 and 261 taking the DIT-2 in 2001, each of whom also responded to political preference scales) we measure the amount of variance shared by the “ethical” and “political” measures. In our samples, political position explains less than ten percent of the variance in DIT and DIT-2 P scores as well as the new N2 scores; these effect sizes are small, so that the scores may not be seriously threatened by confounding.


Relative weighting of common and unique balanced scorecard measures by knowledgeable decision makers

William N. Dilla
Iowa State University

Paul John Steinbart
Arizona State University

ABSTRACT: Prior research has found that decision makers with limited experience in using the Balanced Scorecard (BSC) ignored measures that reflect the unique strategy of a business unit and based their performance evaluations solely on measures common across units. The purpose of this study is to investigate whether decision makers who have had training and experience in designing BSCs exhibit the same behavior. Results of an experiment show that decision makers who are knowledgeable about the BSC attended to both common and unique measures, but placed greater emphasis on the former. These results hold in both a performance evaluation judgment and in a bonus allocation decision. We attribute these results to the knowledge participants acquired through classroom training on the design of the BSC, but cannot rule out an alternative explanation that our results differ from previous research because participants in our study were undergraduate accounting and information systems majors, rather than MBA students.

Eliciting experts’ context knowledge with theory-based experiential questionnaires

Michael Gibbins and Sandy Q. Qu
University of Alberta

ABSTRACT: This paper describes a useful addition to behavioral researchers’ set of research methods, supplementing and extending what can be learned from interviews, surveys and experiments. The experiential questionnaire (EQ) is designed to study the context within which experts behave, guided by theory about that context and by extensive pre-testing with representatives of the target population of respondents.
An EQ is built around expert respondents’ experience of their context, the world in which they function, as represented by cases they have experienced and can describe in detail. The value of the data is supplemented by having the respondents choose the cases and do much of the categorization and coding of their own responses. The EQ’s questions are worded in matter-of-fact terms familiar to the respondents, to encourage respondents to report their experienced contexts dispassionately.
This paper describes the EQ method, with examples from the mostly auditing published studies and suggestions about extensions into other areas of accounting research. The value of studying experts’ context is addressed, as are matching of respondents and theory, designing and testing an EQ, and some threats to validity of the data resulting from an EQ. References to related research literatures are included.

Alternative measures of manager’s performance,
controllability and the outcome Effect

Dipankar Ghosh
University of Oklahoma

ABSTRACT: This research examines whether alternative performance evaluation measures of managers (return of investment, sales per square foot, customer satisfaction and employee satisfaction) with varying controllability increases or decreases the extent of the outcome effect and whether asking the evaluator to assess the evaluatee’s controllability of these measures prior to the evaluation mitigates the effect. The outcome effect occurs when outcome knowledge systematically influences the evaluator’s assessment of the evaluatee irrespective of the quality of his or her initial decision resulting in the outcome. The experimental results reveal that the outcome effect increased as the controllability of the retail store manager’s outcome measure increased, with the increase being more for non-financial measures than for financial measures. The results also show that controllability assessment of the outcome measures prior to the actual evaluation reduced the outcome effect across all measures.

Key words: Performance evaluation, performance measures, outcome effect, controllability

Accountants’ commitment to their profession: Multiple dimensions of professional commitment and opportunities for future research

Mathew Hall
David Smith
University of Melbourne

Kim Langfield-Smith
Monash University

ABSTRACT: Professional commitment (PC) refers to attachments that individuals form to their profession, and has been linked to outcomes such as improved job satisfaction and reduced likelihood of leaving the profession (Harrell et al. 1986; Meixner and Bline 1989). Recent arguments in the organizational behavior literature have emphasized the importance of developing a more complete understanding of PC (Irving et al. 1997; Meyer and Allen 1997). Research has demonstrated empirically the existence of multiple dimensions of PC and found that they relate differently to important affective and behavioral outcomes (Meyer et al. 1993; Irving et al. 1997). Despite these developments, no published studies have examined the existence and/or effects of multiple dimensions of accountants’ PC. This paper reviews the literature to identify important antecedents and outcomes of accountants’ PC. Opportunities for future research that incorporate a multi-dimensional view of accountants’ PC are presented.


20-F reconciliations and investors’ perceptions of risk, financial reporting and quality of accounting principles

James J. Maroney
Northeastern University

Ciarán Ó hÓgartaigh
Dublin City University

ABSTRACT: This paper investigates whether the increases and decreases to earnings and stockholders’ equity presented in 20-F reconciliations influence perceptions of the risk of investing, the quality of the accounting principles and the financial performance of the reporting firm. The research results indicate that subjects perceive the risk of a hypothetical firm filing a 20-F reconciliation with reconciliation decreases to be higher, and the quality of accounting principles lower, than a hypothetical firm either complying with U.S. GAAP or filing a 20-F reconciliation with reconciliation increases. Additional analysis suggests that these significant effects are due to a negative effect from the reconciliation decrease consistent with the effects predicted by attribute framing theory. The findings have implications for the SEC as they consider whether foreign registrants on U.S. exchanges should be allowed to comply with international accounting standards without reconciliation to U.S. GAAP. These findings also have implications for foreign registrants on U.S exchanges. The results indicate that firms that have higher non-U.S. GAAP earnings (and a consequent reconciliation decrease) should comply with U.S. GAAP as the reporting of a reconciliation decrease creates a negative perception of the firm.

KEY WORDS: 20-F reconciliations, Risk perceptions, Foreign registrants, Quality of accounting principles.



Robert J. Ramsay
University of Kentucky
Richard M. Tubbs
University of Iowa
ABSTRACT: Many accounting judgments are diagnostic tasks in which accountants, auditors, managers, or investors discriminate among possible states and decide which one exists. To measure the accuracy of such decisions, most accounting research employs percentage correct, a measure proven to be invalid and unreliable, primarily because it does not control for response bias. This paper describes Signal Detection Theory (SDT), a theoretical model of diagnostic tasks that has been empirically supported in many fields. SDT provides superior measures of accuracy and response bias. We discuss the benefits of employing SDT in accounting research and describe an SDT-based reanalysis of data related to two published accounting studies that results in revised conclusions and important additional insights.

Keywords: Diagnostic tasks; Signal Detection Theory; Accuracy; Response bias; Confidence.

Decision aids and experiential learning

Jacob M. Rose
Montana State University

ABSTRACT: Rose and Wolfe (2000) demonstrated that decision aid design is critical to learning from decision aids, and aids that produce less cognitive load result in superior learning by aid users compared to aids that produce more cognitive load. The current research investigates whether a tax decision aid has differential affects on the knowledge acquisition of accounting students with varying perceived aptitudes for tax and interest in tax as a career. Results indicate that participants with more interest in and perceived aptitude for tax acquire more tax-related knowledge during manual task completion than participants with less perceived aptitude and interest. Similar to prior research, decision aids generally decrease learning relative to unaided environments. When decision aids do not produce a heavy cognitive load, however, participants with less perceived aptitude for and interest in tax learn as much in aided environments as they learn in unaided environments.


The Role of Social Influences in Using Accounting Performance Information to Evaluate Subordinates: A Causal Attribution Approach

Yin Xu
Old Dominion University

Brad Tuttle
University of South Carolina

ABSTRACT: One important role of accounting information is to provide objective information to assist decision-makers in evaluating the performance of their subordinates. Yet, whether decision-makers use accounting data in an objective fashion, independent of interpersonal factors is an open question. The purpose of this study is to investigate whether similarities in work style (innovator vs. adaptor) between a manager and a subordinate influences the manager’s causal attributions and subsequent performance evaluation for the subordinate, given accounting performance indicators.
The study is conducted in an experimental setting and the research analysis used is developed within the framework of a structural equation model. The results of the study provide initial evidence that interpersonal factors such as work style similarity and personal liking moderate how supervisors use accounting information when they make performance evaluation decisions. The more similar work style between supervisor and subordinate, the more the supervisor likes the subordinate. This in turn directly influences what the supervisor believes is the cause of the subordinate’s performance.