An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Erick G Valentine
Kansas State University

Abstract: This study examines the moderating effect of counterfactual generation on political influence in the resource allocation setting. The hypotheses suggest that in the counterfactual up condition, individuals will discount managers’ comments and in the counterfactual down condition subjects will rely more heavily on managers’ comments. Three experimental groups were used, differentiated by counterfactual up, counterfactual down, and control conditions. Each group was asked to choose between a set of production options proposed by two managers, one manager who makes comments often and another manager who does not.

Results were mixed, exhibiting discounting of managers comments in all three conditions, most significantly in the counterfactual up condition. An interpretation of these results suggests that when directed, individuals can generate upward counterfactuals, and those counterfactual generations may have a strong effect.

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