Defining Deviancy Down: The Development of Norms Under Imperfect Controls

• In Event: Managerial Contracts

Abstract

This study highlights how formal controls and the behavior of peers can shape individual behavior in accounting contexts. We examine how formal controls can directly influence individuals’ beliefs about appropriate behavior in particular situations and indirectly influence individuals’ conformity to the behavior of others. We exogenously manipulate individuals’ beliefs about appropriate behavior (via accounting control systems), as well as visible peer behavior in the experimental setting, allowing us to precisely investigate the interaction of these two constructs. We demonstrate that individuals conform more to peer behavior when that behavior conflicts with individuals’ own beliefs about appropriate behavior. Furthermore, we find that individuals preferentially attend and conform to the self-interested actions of peers when given mixed signals about peer behavior. Our results suggest that formal controls and peer interactions may lead individuals and groups to gravitate toward less compliant behavior over time.

Authors

• Ronald N Guymon, Georgia State University

• William B. Tayler, Brigham Young University

• Donald R Young, Georgia Institute of Technology

• Scott Emett, Cornell University