|
Legitimacy and attribution: the effect of perceived biases on capital investment evaluation judgments
Mandy Man - Sum Cheng,
The University of New South Wales
Habib Mahama, The University of New South Wales
ABSTRACT. Prior studies on capital budgeting have highlighted the importance of using third-party reviewers in the evaluation of investment proposals, but few have considered factors that may affect the evaluation judgment of these reviewers. Drawing from the legitimacy literature and the attribution theory, we examine the effect of perceived biases on the judgment of a reviewer of capital investment proposal. Specifically, we hypothesize that reviewers are less likely to approve a capital investment proposal if its presentation format deviates from the company’s capital budgeting policies. Furthermore, we predict that the reviewers’ evaluation judgment will be even more negative if the preparer is perceived to potentially benefit from project approval. The results from an experiment provide strong support for our propositions. The findings contribute to our understanding of factors that influence reviewers’ project evaluation judgment, and the legitmization role of company policie.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|