Behavioral Research in Accounting


Volume 14
A publication of the Accounting, Behavior and Organizations Section
of the American Accounting Association

Table of Contents

The Effects of Flexible Work Arrangements
on Stressors, Burnout, and Behavioral Job Outcomes
in Public Accounting

Elizabeth Dreike Almer
Portland State University

Steven E. Kaplan
Arizona State University

ABSTRACT: The majority of public accounting firms now offer flexible work arrangements to their professional employees. Presumably these arrangements help accommodate employee needs to manage work and family demands, while also improving job satisfaction and retention. The ability of flexible work arrangements to achieve these goals has received little attention. The current paper addresses this issue by reporting the results of a survey of CPAs working under a flexible work arrangement and a similar group of CPAs working under a standard arrangement but who appear to be plausible candidates for a flexible work arrangement. The survey elicited information about several key employment variables: job-related stressors (e.g., role conflict, role ambiguity, and role overload), burnout tendencies (e.g., emotional exhaustion, reduced personal accomplishment, and depersonalization) and behavioral job outcomes (e.g., job satisfaction and turnover intentions).

Results show that CPAs on flexible work arrangements report higher job satisfaction and lower turnover intentions than those on a standard work arrangement. CPAs on flexible work arrangements generally have lower levels of burnout and stressors, though the reduced personal accomplishment burnout dimension may be conditioned upon whether the CPA has a mentor. Finally, for professionals switching to a flexible work arrangement, respondents indicated a significant improvement in job satisfaction and turnover intentions as well as some decline in burnout and stressors.

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An Empirical Examination of
Competing Theories to Explain the Framing Effect
in Accounting-Related Decisions

C. Janie Chang
San Jose State University

Sin-Hui Yen
Tamkang University

Rong-Ruey Duh
National Taiwan University

ABSTRACT: The purposes of this study are to explore framing effects in a managerial accounting decision context and to test the explanatory power of prospect theory and two competing theories, fuzzy-trace theory and probabilistic mental models, on such effects. In Experiment 1, 86 undergraduate students made a choice between two alternatives in a managerial decision problem that illustrates a classic, Asian disease-type business scenario. Results show that the subjects committed the framing effect bias and that prospect theory, fuzzy-trace theory, and probabilistic mental models all predict the bias. In Experiment 2, a business variant of the Asian disease problem was designed to distinguish among the explanatory abilities of these theories in an accounting context. One hundred eighty-five undergraduate students participated in the experiment. Results of Experiment 2 indicate that the fuzzy-trace theory provides additional power to explain the framing effect. Hence, accounting professionals can design better approaches to reporting/presenting financial information that will help managers alleviate the framing effect in decision making.

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Budget Goal Commitment and Informational Effects
of Budget Participation on Performance:
A Structural Equation Modeling Approach

Vincent K. Chong
The University of Western Australia

Kar Ming Chong
The University of New South Wales

ABSTRACT: This paper examines budget goal commitment and informational effects of budget participation on performance. A structural model is proposed and tested that includes budget participation, budget goal commitment, job-relevant information, and job performance variables. The data were collected by survey questionnaires. Seventy-nine middle-level managers, drawn randomly from a cross-section of manufacturing companies in Australia, participated in the project. A structural equation modeling technique was used to test hypothesized linkages. Support was found for the effects of budget goal commitment and informational roles of budget participation on job performance.

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A Research Note on the Influence of Outcome Knowledge
on Audit Partners’ Judgments

Craig Emby
Alexander M. G. Gelardi
Simon Fraser University

D. Jordan Lowe
University of Nevada, Las Vegas

ABSTRACT: Audit partners may be called upon to evaluate, ex post, the work of another auditor. One example of such an evaluation is a Peer Review. An experiment was conducted that examined the influence of outcome knowledge on the going concern and peer evaluation judgments of 122 audit partners from Canada and the United States. Outcome information was manipulated at three levels—no outcome, negative outcome, and positive outcome information. The results confirm previous research and show that audit partners are subject to the influence of outcome information. Negative outcome information influenced (1) audit partners’ assessments of the likelihood of the client’s continued existence (hindsight effects), (2) the evaluation of the incumbent auditor’s judgment (outcome effects), and (3) judgments of the importance of evidence items. Auditors who received outcome information tended to rate outcome-consistent items of evidence as more important. This suggests that the biasing effect of outcome knowledge operates by acting as a filter that magnifies the relative salience of outcome-consistent information.

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Workplace Environment in a Professional Services Firm

Karen L. Hooks
Julia L. Higgs
Florida Atlantic University

ABSTRACT: This paper is based on survey results from 1,055 partners and employees of an international professional services firm regarding the workplace environment. Data collected address influences on work schedules, work time and locations, work with technology, and choices to work from home. The results suggest that client, organizational, and personal factors influence the work environment, and that the use of technology enables flexibility. The survey results are discussed referencing concepts of motivation, productivity, supervision, and control; empowerment and implications for accounting research are proposed.

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Investors’ Use of Analysts’ Recommendations

Ranjani Krishnan
Michigan State University

Donna M. Booker
University of Cincinnati

ABSTRACT: This study examines the factors influencing the decisions of investors who use analysts’ recommendations to arrive at a short-term decision to hold or to sell a stock. Specifically we examine if the presence of analysts’ recommendations reduces the tendency for investors to commit the disposition error, i.e., sell winning stocks too soon and hold losing stocks too long. We also examine whether the strength of supporting arguments to the analysts’ recommendations affects investor decisions. Our results indicate that the presence of an analyst summary recommendation report reduces the disposition error for gains but not for losses. A strong form of the analyst summary recommendation report, i.e., one with additional information supporting the analysts’ position further, reduces the disposition error for gains and also reduces the disposition error for losses.

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Decision Aids for Generating Analytical Review Alternatives:
The Impact of Goal Framing and Audit-Risk Level

Jennifer M. Mueller
Auburn University

John C. Anderson
San Diego State University

ABSTRACT: An auditor generating potential explanations for an unusual variance in analytical review may utilize a decision aid, which provides many explanations. However, circumstances of budgetary constraints and limited cognitive load deter an auditor from using a lengthy list of explanations in an information search. A two-way between-subjects design was created to investigate the effects of two complementary approaches to trimming down the lengthy list on the number of remaining explanations carried forward into an information search. These two approaches, which represent the same goal (reducing the list) but framed differently, are found to result in a significantly different number of remaining explanations, in both low- and high-risk audit environments. The results of the study suggest that the extent to which an auditor narrows the lengthy list of explanations is important to the implementation of decision aids in analytical review.

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Evidence of an Association between
Error-Specific Experience and Auditor Performance
during Analytical Procedures

Ed O’Donnell
Arizona State University

ABSTRACT: This study examined whether error-specific experience can improve auditor performance during analytical procedures. In a field experiment, practicing auditors with different amounts of experience used analytical procedures to diagnose the reason for an unexpected interperiod change in an account balance. Analyses controlled for the influence of (1) general audit experience, (2) industry-specific experience, and (3) error-specific experience. Findings suggest that, for participants with less general experience, error-specific experience increased the likelihood that they would provide a correct explanation. However, the benefits of error-specific experience diminished as general experience increased. One interpretation is that error-specific experience provides little or no incremental benefit for auditors who have already developed, through general experience, the analytical skills they need to perform effectively. These results provide evidence that error-specific experience could be a surrogate for the learning opportunities made available through general experience. Research that explores how error-specific experience might be provided through training is suggested.

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Behavioral Implications of Information Systems
on Disclosure Fraud

Steven T. Schwartz
SUNY at Binghamton

David E. Wallin
The Ohio State University

ABSTRACT: This paper uses a laboratory setting to investigate behavioral issues related to disclosure fraud. Subjects issued disclosures under one of two settings. They either knowingly issued fraudulent reports or they allowed an information system to issue fraudulent reports at a chosen rate. The settings were economically equivalent and each mechanism allowed for an implementation of the profit-maximizing strategy. The central question is one of the relative effect of the available method of lying on the frequency of lying. The results show that when subjects were distanced from the fraud through use of an information system, they made choices that would maximize their earnings. However, making subjects more closely involved with the disclosure reduced the rate of fraudulent disclosures by 30 percent. Differences in female and male rates of fraudulent reporting waned over time.

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The Effect of the Busy Season Workload
on Public Accountants’ Job Burnout

John T. Sweeney
Washington State University

Scott L. Summers
Brigham Young University

ABSTRACT: Anecdotal evidence suggests that the escalated workload of the public accounting “busy season” is a major contributor to employee “burnout.” Academic research on the psychological impact of the busy season workload, however, is virtually absent from the accounting literature. We partially address this void by employing a longitudinal design and structural equation modeling to examine the causal impact of the busy season workload on public accountants’ job burnout—a dysfunctional stress syndrome. Prior to the start of the busy season and again at its end, we measured hours worked, role stressors, and job burnout for a sample of public accountants from a national firm. The results of our analyses indicate that public accountants’ pre-busy season burnout was not directly affected by hours worked, even though subjects reported an average workload of 49 hours per week. This result implies that public accountants may develop a relatively high workload threshold before it directly impacts their job burnout. During the busy season, our subjects’ weekly workload increased to approximately 63 hours. The additional workload burden introduced by the busy season caused job burnout for our sample of public accountants to rise to levels rarely reported in the research literature.

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The Influence of Fairness Perceptions and Goal Commitment
on Managers’ Performance in a Budget Setting

Kristin Wentzel
La Salle University

ABSTRACT: Recent budgeting research suggests that fairness perceptions play a role in performance. In particular, prior work demonstrates a positive relation between fairness and performance during budgeting. The process by which fairness perceptions translate into improved performance, however, remains unaddressed. This study contributes to the accounting literature by investigating whether fairness perceptions improve performance via participation by increasing managers’ commitment to budgetary goals. Structural equation models are proposed in which both fairness perceptions and goal commitment influence managers’ performance during budgeting. Questionnaire data collected from one field site in the midst of downsizing were used to test the models. The results suggest that increased participation during budgeting fosters a sense of fairness, which, in turn, increases managers’ commitment to budgetary goals and subsequently enhances performance ratings. The direct path between fairness perceptions and performance, however, appears to be insignificant when goal commitment is considered.

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