Management Accounting Section Midyear Meeting

Unintended Consequences of Budget Participation and Performance Misreporting: An Experimental Study

• In Event: Break and Research Exhibition 2
  In Paper Session: Room 1

Abstract

Clarifying mechanisms of accounting fraud to achieve performance targets is an important issue in accounting research. Especially, examining the impact of a set of goal-setting processes on both performance and its misreporting behavior is a major topic.
To examine this impact, we conducted an online experiment using Amazon Mechanical Turk and oTree in which participants were asked to perform a real effort task and a goal-reporting behavior (N = 378). We compared participants’ performance and reporting behavior for conditions with and without participation in the goal-setting process.
Our results revealed an unintended consequence—dishonest performance reporting was more frequent for the budgetary participation condition than the no participation condition. This result was explained by both the moral disengagement theory, in which task sincerity is consistent with reporting sincerity, and the change in the relationships among participation, task performance, and reporting behavior. Our study sheds light on a novel mechanism of accounting fraud to achieve performance targets.

Authors

• Yusuke Sawada, Doshisha University

• Satoshi Taguchi, Doshisha University