Sources of Employee Appreciation Messages and Bias in Accounting Estimates

• In Event: Fair Value and Estimation

Abstract

Accounting estimates are common in financial reporting and are especially susceptible to
manipulation because they are subjective. We examine the effects of the source of employee
appreciation messages (from an immediate supervisor or a more general corporate source) on
subordinate accountants’ willingness to comply with their supervisor’s suggestion to lower an
estimated expense to increase the supervisor’s bonus. For a period of (hypothetical) months
before the supervisor requests the biased estimate, upper-level accounting students who assume
the role of an accounting manager receive a series of employee appreciation messages from
either their supervisor or the company’s HR team. The messages are identical except for their
source. Consistent with our hypotheses, their estimates are lower when the appreciative messages
come from their supervisor than from the HR team, and this effect is mediated by their feelings
about their supervisor. We also control for the perceived sincerity of the messages because prior
findings suggest that the effect of such messages on employees’ feelings about their supervisor
depends on employees’ perception of the purpose of the messages. Our findings suggest that
those who implement employee appreciation communications should take into account this
potential unintended cost of channeling employee appreciation messages through immediate
supervisors.

Authors

• Jordan Michael Bable, University of Pittsburgh

• Donald V Moser, University of Pittsburgh