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Prior studies of the relative contributions of information choice and
information processing in decision making have concentrated on the results
of information choice, ignoring possible effects from the act of choosing.
This paper investigates effects on auditors’ intrinsic motivation and decision
performance that are due only to the act of choosing information to use
in the decision task. A model linking the act of choosing to intrinsic
motivation and performance is proposed and tested. Results of the experiment
show that auditors given a choice of information were more intrinsically
motivated and predicted more accurately than auditors given equally-predictive
information, but who had no choice of information.
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Herding behavior occurs when individuals use a consensus opinion to
modify their private beliefs. It is a response to task complexity created
by constraints on time, information or ability. Various factors have been
hypothesized to influence herding, including: concern over one’s reputation,
forecast ability, perceived credibility of the consensus forecast, and
the variance among the individual opinions comprising the consensus forecast.
Using a field experiment, we empirically test these theoretical explanations
of herding behavior. Subjects were drawn from a population of investors
who combine assets to construct a jointly managed equity portfolio. The
circumstances under which they participate in their portfolio management
create an environment that parallels the decision-making environment of
professional analysts. The subjects were given information about a specific
company, including a consensus analysts’ forecast, and were asked to generate
earnings predictions. The type of information available to the subjects
was varied in order to distinguish between herding behavior and alternative
explanations for a correlation among forecasters’ opinions. The results
indicated that forecasters who highly valued their reputation among their
peers were more likely to engage in herding behavior. Self perceived forecast
ability was found to be inversely related to herding behavior levels. In
addition, forecasters’ assessment of the consensus forecast credibility
increased herding behavior. However, forecasters were not influenced by
the variation among individual opinions comprising the consensus forecast.
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The purpose of this study is to investigate whether selection bias stemming
from firms’ employee selection and individuals’ career decisions rather
than learning may, at least in part, account for differences between individuals
with different levels of audit experience. More specifically, we investigate
whether knowledge differences that previous research indicates exist between
students and practicing auditors also exist between students who do and
do not enter public accounting. Experimentally, we compare the performance
of students who are entering public accounting to the performance of students
who are not entering public accounting. The results indicate that students
entering public accounting have systematically higher levels of auditing-related
knowledge than do students who do not enter public accounting. These results
suggest that cross-sectional tests for learning based on comparisons of
students and experienced auditors may be confounded, and that interpretation
of previously documented differences between experienced auditors and students
as evidence of experiential learning and firm training is suspect.
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It is commonly believed that accountability distinguishes accounting
information systems from other types of information systems. (See The Commission
on Auditors’ Responsibilities: Report, Conclusions, and Recommendations
1978.) An accounting information system records and classifies the exchanges
that are made in the stewardship of particular assets. Once recorded, this
information is made public, holding the steward accountable for his/her
actions. In agency models, accountability is modeled by precisely defining
the incentive inducing protocol which relates observable output to the
steward’s share of output. Even in the absence of such a protocol, experimental
evidence suggests that the simple act of recording a steward’s exchanges
creates accountability by causing her/him to modify her/his behavior in
light of this accounting. Such behavioral modifications systematically
occur in absence of enforceable contracts defined on output and can occur
in the absence of repeat interactions. Apparently, accountability has greater
scope.
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The purpose of this research is to test whether control procedures can reduce escalation of commitment, that is, the tendency of decision makers to persist with a project in spite of negative feedback that the initial investment has not realized its goals. Three control procedures which may mitigate escalation tendencies were examined: (1) providing unambiguous feedback regarding previous expenditures, (2) preparing a progress report on the project, and (3) providing information about future benefits of additional expenditures. This research hypothesizes that these controls will mitigate escalation tendencies.
The task for the experiment and the operationalization of control mechanisms
in this research was adapted from an actual project undertaken by a nationally
known fast-food chain. The experimental results support the research hypotheses.
Specifically, the evidence shows that the provision of precise feedback
and information on future benefits of additional expenditures significantly
reduces the tendency to escalate commitment. Similarly, preparation of
the project’s progress report significantly moderates additional resource
commitment compared to the resources committed in absence of a report.
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Social utility is the (dis)utility that arises from the comparison of
one’s own outcomes with the outcomes of others. For a transfer pricing
situation, buyers’ and sellers’ utilities (judgements of satisfactions)
were elicited for situations where the relative outcomes were equally distributed,
advantageously distributed and disadvantageously distributed. The utility
measures were used in two ways. First, various functional forms were examined.
The utility functions incorporated arguments for one’s own outcome (nonsocial
utility) and the comparison with outcomes of others (social utility). The
utility function with the best fit was a social utility function, and was
generally steeply increasing and convex for disadvantageous distributions
and weakly declining and convex advantageous distributions. Second, based
on the social utility function identified, the utility measures were examined
for the impact of the contextual variables. Three contextual variables,
cost situation (increased cost versus decreased cost), role (buyer versus
seller) and prior relationship (positive versus negative) were manipulated.
All three of these variables had an effect on some aspect of social utility.
This study provides evidence that social utility can exist in a managerial
accounting situation and that contextual variables can impact that utility.
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The significant results reported using job satisfaction and organizational
commitment as antecedents to turnover intentions, and their extensive use
in behavioral research, make the causal relationship between them a subject
of interest in accounting and other fields. This study addresses the causal
ordering of these two constructs. Using staff accountants as subjects,
and structural equation modeling as the statistical technique, the results
indicate a causal ordering from organizational commitment to job satisfaction.
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Time pressure is an important feature of many accounting settings. This
study describes a theoretical basis and provides supporting empirical evidence
regarding how experience influences adaptation to time pressure in a tax
information search task. Forty-three tax professionals and 53 graduate
tax students participated in a computerized experiment in which subjects
selected relevant key words relating to a partnership tax issue. Results
are consistent with the idea that, in response to time pressure, experienced
decision makers are able to selectively identify and encode information
important in the context of an information search task to a greater extent
than inexperienced decision makers. This increased selectivity allowed
experienced subjects to respond to time pressure by (1) reducing the amount
of time they spent initially assimilating the problem statement to a greater
extent than inexperienced subjects, (2) decreasing the amount of time they
spent referring back to the factual case information to a greater extent
than did inexperienced subjects, and (3) increasing the degree to which
they searched more important areas of the database per unit of search time
to a greater extent than did inexperienced subjects. These findings provide
new insights on how time pressure and experience interactively affect the
way decision makers selectively encode and use information during information
searches.
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This study extends previous research in the area of supervisory style as it pertains to the use of budgetary information for performance evaluation. Previous work has focused exclusively on the superior’s budgetary performance evaluation style. This study focuses on both the superior’s perceived and the subordinate’s preferred budgetary performance evaluation styles. When the subordinate’s preferred style disagrees with the superior’s perceived style, this disagreement is hypothesized to lead to the subordinate’s feeling higher job-related tension and lower job satisfaction. One hundred ten subjects from ten firms participated in this study. The results support the hypothesized relations.
This study also examines two mediating models, (1) job-related tension
that may mediate the relationship between disagreement in budgetary performance
evaluation style and performance, and (2) job satisfaction that may mediate
the relationship between disagreement and performance. The results indicate
that both job-related tension and job satisfaction mediate the relationship
between disagreement in budgetary performance evaluation style and performance.
Finally, a structural equation model is used to determine the overall impact
of disagreement in budgetary performance evaluation style on the subordinate’s
job-related tension, job satisfaction and performance.
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This study investigates the relationship between public and private information using experimental markets. The level of public disclosure is varied to examine the effect on private information consumption and the informedness of price. The experimental setting consists of a double-auction security market and an information market running concurrently. After all traders received public information, the markets commenced and both the informedness of price and the amount spent on private information were determined endogenously.
The results indicate that an inverse relation exists between public disclosure and private information consumption and between the informedness of price and private information consumption. The evidence also suggests that the overall informedness of traders increases with increases in the level of public disclosure. These results are consistent with the predictions of Verrecchia (1982a, 1982b).
Unlike prior studies, this study finds that, after considering the cost
of information, less-informed traders earned considerably more than relatively
informed traders and this was consistent over all subject groups, days
and levels of public information.
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Over the last 30 years, incidents of suspected mistreatment of human
subjects have been sporadically reported by the press. While most of the
headlines have involved medical studies, social science and behavioral
research have occasionally been the subject of criticism as well. Concern
for the rights of human subjects in research studies led to the enactment
of federal legislation requiring the review and monitoring of human-subject
research. This legislation most notably mandated the creation of institutional
review boards at every university or other organization that conducts biomedical
or behavioral research involving human subjects. This paper discusses the
federal requirements for review of accounting research, and specifically
discusses features of accounting research that may affect the review process.
In addition, based on the results of a survey of research administrators,
potential problems that accounting researchers may face and the consequences
of bypassing the review process are discussed.
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A significant concern in behavioral research in accounting has been the effect of experience on judgment and decision making. As widely recognized, there are, however, several dimensions to experience, including general domain experience and task-specific experience. One important dimension that has received limited attention is industry experience. For instance, in an audit context, greater industry experience is expected to lead to greater effectiveness and efficiency as auditors develop a knowledge base of the unique risks and audit approaches for a particular industry. The purpose of this study is to investigate the impact of industry experience on the generation of hypotheses of likely errors in conducting analytical procedures. Other audit-planning tasks are also examined (e.g., risk assessment and extent of testing).
Seventy-two auditors, 34 with significant retailing experience and 38
without such experience (both groups ranging in rank from senior to partner),
completed a comprehensive, realistic case for a retailing client. Four
material errors, three relating to a retailing environment, were present
in the case. The findings indicate that industry experience significantly
enhanced hypotheses generation in identifying errors but did not affect
risk assessments or revisions to planned extent as expected. Proportionately
greater audit hours were, however, assigned to more experienced audit staff
for misstated accounts.
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