Crowding Out Best Practice: Circumstances Matter More Than Rules

• In Event: Accounting Behavior and Organizations

Abstract

Motivation crowding literature principally relates to economic incentivization “crowding in” or “crowding out” competing motives in the decision to act. This paper adds the consideration that other factors have a crowding in or crowding out effect on enforcement best practices. Further, we contemplate potential flaws in current punishment mechanisms. We confront the possibility that individuals charged with punishing financial crimes might be excessively tolerant of these crimes. Using a two-study experimental task that manipulates the fraudster’s motivation, history, and personal gain, we find that auditors and arbitrators tasked with sanction recommendations are influenced by non-statutory circumstances both separately and as interactions. Further, we find that monetary sanction recommendations are influenced by non-statutory circumstances both separately and as interactions. Further, we find that monetary sanction recommendations are low based on the impact of the fraud.

Authors

• Joseph M Wall, Marquette University

• Timothy J Fogarty, Case Western Reserve University

• Jodi Lynn Gissel McDowell, Marquette University