Behavioral Research in Accounting (BRIA)


Volume 19

A publication of the Accounting, Behavior and Organizations Section of the AAA

Table of Contents

Stephen K. Asare, Christine M. Haynes, and J. Gregory Jenkins


Donna M. Booker, Andrea Drake, and Dan L. Heitger


Laurie Burney and Sally Widener


Andrea Drake, Jeffrey Wong, and Stephen Salter


Donald B. Fedor and Robert J. Ramsay


·         Ethical reasoning and equitable relief*

Gary Fleischman, Sean Valentine, and Don W. Finn


·         Estimating activity costs: How the provision of accurate historical activity data from a biased cost system can improve individuals’ cost estimation accuracy*

Dan. L. Heitger


·         The effect of audit inquiries on the ability to detect financial misrepresentations*

Chih-Chen Lee and Robert B. Welker


·         The impact of financial information and voluntary disclosures on contributions to not-for-profit organizations

Linda M. Parsons


Robert Pinsker


·         Attention to evidence of aggressive financial reporting and intentional misstatement judgments: Effects of experience and trust*

Jacob M. Rose


·         Culture, implicit theories, and the attribution of morality*

Bernard Wong-On-Wing and Gladie Lui


William F. Wright


* Accepted by S. Kaplan



The Effects of Client and Preparer Risk Factors

on Workpaper Review Effectiveness


Stephen K. Asare

University of Florida


Christine M. Haynes

University of West Georgia


J. Gregory Jenkins

Virginia Polytechnic Institute and State University



ABSTRACT: Both client risk and workpaper preparer risk are important contextual factors that reviewers must manage. In this study, we experimentally investigate how combined client risk and preparer risk impact workpaper review effort and accuracy. We found that reviewers allocated more effort when reviewing workpapers of a high risk client, relative to a low risk client, but preparer risk did not drive effort. With respect to review accuracy, we found that in a high client risk environment, reviewers were more accurate when preparer risk was high than when preparer risk was low. However, when client risk was low, review accuracy was invariant to preparer risk. These results suggest that although preparer risk is not a driver of review effort, it, nevertheless can affect accuracy when client risk is high. Together, the results suggest that review effort does not appear to be the sole determinant of review accuracy.


New Product Development: How Cost Information Precision Affects Designer

Focus and Behavior in a Multiple Objective Setting


Donna M. Booker

Assistant Professor of Accounting

University of Cincinnati


Andrea Drake

Assistant Professor of Accounting

University of Cincinnati


Dan L. Heitger*

Assistant Professor of Accounting

Miami University


ABSTRACT: The development of new products that satisfy customer needs in a cost effective manner is key to survival for many organizations. The role that cost information plays in new product development (NPD), such as its effect on designers’ focus and crucial NPD performance measures, is unclear. This experimental study extends existing accounting NPD research by investigating the effect of two levels of cost information precision (specific versus relative) and new products (radical versus incremental) on designers’ focus and two common NPD performance measures: product cost and product features. The results indicate that compared to relative cost information, specific cost information increases designers’ focus on cost minimization for incremental but not radical products. However, providing designers with specific cost information results in more cost effective designs for both types of products. In addition, contrary to expectations, more cost effective designs do not come at the expense of reduced product features. The results show that the role played by cost information in NPD is more complex than has been suggested in prior literature.


Strategic Performance Measurement Systems, Job-Relevant Information and Managerial Behavioral Responses—Role Stress and Performance


Laurie Burney

Mississippi State University


Sally K. Widener

Rice University


ABSTRACT: This study explores managerial behavioral responses associated with the extent to which a firm’s performance measurement system is linked to its strategy (SPMS). We hypothesize that an SPMS is positively associated with higher levels of job-relevant information (JRI) and lower levels of role stressors, which are then associated with higher levels of managerial performance. Using survey data from over 700 respondents, we find that an SPMS positively affects performance through its relations with JRI and role ambiguity (RA). Managers perceive that they have higher levels of JRI and lower levels of both role conflict (RC) and RA when they have an SPMS closely linked to strategy. In turn, performance is higher when managers perceive that their RA is lower. Additionally, we find that the link to the evaluative process, complexity, and managerial experience moderate the relations between an SPMS and JRI, RA, and RC. 


Empowerment, Motivation, and Performance: Examining the Impact of Feedback and Incentives on Non-management Employees


Andrea Drake

University of Cincinnati


Jeffrey Wong

University of Nevada at Reno


Stephen Salter

University of Cincinnati


ABSTRACT: Motivated employees play a key role in organization success and past research indicates a positive association between perceptions of empowerment and motivation. A prominent model put forth by Spreitzer (1995) suggests that two major components of control systems will positively affect employee feelings of empowerment-- performance feedback and performance-based reward systems. This experimental study contributes to the behavioral accounting literature by examining how specific types of performance feedback and performance-based rewards affect three psychological dimensions of empowerment. Also, we use a relatively simple context to investigate whether predictions validated on surveys of managers also hold for lower-level workers. Our results suggest that feedback and rewards affect the dimensions of empowerment differently for lower level workers than they do for managers. Namely, performance feedback was positively associated with only one dimension and performance-based rewards had negative effects on two out of the three dimensions. In addition, overall motivation was not significantly associated with two of the three empowerment dimensions. Implications of this study are that techniques that work to increase manager perceptions of empowerment may not work at lower organizational levels and, even if successful, the related increase in employee motivation may not be significant. 


Effects of Supervisor Power on Preparers’ Responses to Audit Review: A Field Study


Donald B. Fedor

Georgia Institute of Technology


Robert J. Ramsay

University of Kentucky


ABSTRACT: This study investigates the role of audit review as feedback to workpaper preparers. Specifically, we examine whether review affects preparers’ attempts to improve their performance, manage their reviewers’ impressions of their work, and seek additional feedback from their reviewers. We also examine the effects of preparers’ perceptions of their reviewers’ power. Power has previously been shown to be a critical construct affecting feedback. Our findings suggest that perceptions of reviewer power affect preparers’ responses to review. Specifically, referent power appears to have the most positive effect on preparer's responses, while perceptions of coercive power have detrimental effects.




Gary Fleischman

University of Wyoming


Sean Valentine

University of Wyoming


Don W. Finn

University of Arkansas


ABSTRACT: Professional manager perceptions were investigated in this study using a survey containing two equitable relief situational vignettes to empirically investigate two of the four steps from Rest’s (1986) ethical reasoning process. Business societal perceptions of the equitable relief subset of the innocent spouse rules were also investigated, focusing on the knowledge of evasion and abuse factors.  The results indicated that the ethical reasoning process was significantly related to ethical decision making and Rest’s model. Furthermore, decision-makers were more likely to judge that relief be granted in an equitable relief scenario involving abuse than to one not involving abuse. The knowledge of evasion factor contained in both scenarios appeared to indirectly influence respondents’ judgments to deny equitable relief, while the presence of emotional abuse strengthened relief judgments. Finally, the study presents a general framework involving the interrelationship of Congressional intent with societal perceptions regarding subjective equitable relief tax law provisions that are associated within a societal context. 


Estimating Activity Costs:  How the Provision of Accurate Historical Activity Data

From a Biased Cost System Can Improve Individuals’ Cost Estimation Accuracy


Dan L. Heitger

Miami University


ABSTRACT: An integral component of effective cost control and performance evaluation is the ability to accurately estimate relationships between activities and overhead costs (i.e., activity costs).  Individuals using a single cost pool system often have to rely on memory of historical activity data when estimating activity costs.  If individuals’ recall of data is representative of the historical data, then reliance on memory should not be detrimental to cost estimation accuracy.  However, individuals often possess incorrect initial beliefs about activity costs.  These incorrect beliefs are expected to serve as an anchor from which individuals make insufficient adjustments when estimating activity costs based on memory of historical activity data.  Multiple cost pool systems frequently provide biased standard rates; however, such systems also provide accurate historical activity data when individuals estimate costs.  I extend prior accounting research by experimentally examining whether a multiple cost pool system’s provision of accurate historical activity data improves activity cost estimation for individuals with incorrect cost beliefs even when the cost system also provides biased standard rates.  The main contribution of the study is its finding that the multiple cost pool system’s provision of historical activity data improves individuals’ adjustments from their incorrect initial cost beliefs when estimating activity costs, thereby increasing their estimation accuracy.  The results suggest that this improved adjustment from incorrect initial cost beliefs occurs because the provision of historical activity data improves individuals’ recognition of how wrong their initial cost beliefs were in reality.  This result is achieved even though the cost system provides biased standard rates.  The ability of flawed cost systems to improve individuals’ activity cost estimation in other such ways has received little research attention and is important because of its potential for improving managerial decision making.


The Effect of Audit Inquiries no the Ability to

Detect Financial Misrepresentations


Chih-Chen Lee

Northern Illinois University


Robert B. Welker

Southern Illinois University – Carbondale


ABSTRACT: Recent professional promulgations recommend the use of audit inquiry for fraud detection. One benefit of audit inquiries is that they may induce interviewees to act in ways that facilitate the discovery of intentional financial misrepresentations (deception). We conducted two experiments to assess the ability of prospective accountants (upper-level accounting majors) to detect intentional financial misrepresentations in audit inquiries. These accounting majors served as proxies for entry-level accountants. Our results indicate that participants have poor deception detection ability in evaluating a response to an inquiry, even when they receive deception detection training prior to the inquiry and when repeat questions are added to the inquiry to heighten the level of stress with which interviewees must cope. But our results also suggest that the inquiry process may change the way participants view interviewees. Participants were more skeptical of verbal financial representations (e.g., valuation, existence) after they observed an inquiry regarding the representations. These results suggest that an inquiry does not significantly increase the ability of entry-level accountants to detect deception accurately, but it may benefit fraud detection by inducing a skeptical mindset for their evaluations of financial representations.


The Impact of Financial Information and Voluntary Disclosures on

Contributions to Not-for-Profit Organizations


Linda M. Parsons

George Mason University


ABSTRACT:            This study uses a field-based experiment combined with a follow-up laboratory experiment to investigate whether accounting information reduces perceived uncertainty about nonprofit operations. Potential donors were sent, via a direct mail campaign, fundraising appeals containing varying amounts of financial and nonfinancial information in order to determine whether individual donors are more likely to contribute when accounting information or voluntary disclosures are provided. Participants in a lab experiment were asked to assess the usefulness of the different versions of the fundraising appeals.  A logistic regression provides evidence that some donors who have previously donated use financial accounting information when making a donation decision. The results are inconclusive regarding whether donors use nonfinancial service efforts and accomplishments disclosures to determine whether and how much to give, but participants in the lab experiment judged the nonfinancial disclosures to be useful for making a giving decision.


Long Series of Information and Non-Professional Investors’ Belief Revision


Robert Pinsker

Old Dominion University


ABSTRACT: This paper reports the results of an experiment designed to examine the effect of disclosure pattern (sequential versus simultaneous) and direction of information (positive/negative versus negative/positive)) on non-professional investors’ belief revisions. An important feature of the experiment is that long series of information are used. Prior research has largely examined individuals’ belief revisions using short series of information.  Results indicate that individuals revise beliefs to a larger extent when the disclosure pattern is sequential rather than simultaneous. The findings extend the prior belief revision literature by providing evidence that results hold using long series of information: the current experiment uses 20 pieces of information, whereas most accounting studies only use four pieces of information. Results also contribute to the extant financial accounting literature on non-professional investors, which is particularly relevant given the larger number of inexperienced investors entering the marketplace and recent legislation that requires more detailed firm disclosures (e.g., the Sarbanes-Oxley Act of 2002).


Attention to Evidence of Aggressive Financial Reporting and Intentional Misstatement Judgments: Effects of Experience and Trust


Jacob M. Rose

Southern Illinois University – Carbondale


Abstract: This study extends prior research by examining the effects of dispositional trust, induced skepticism, and fraud-specific audit experience on attention to aggressive financial reporting practices and judgments of potential misstatement. In an experimental analysis using 125 practicing auditors, this study finds that auditors who are less trusting of others attend more to evidence of aggressive reporting than do more trusting auditors and higher levels of induced skepticism increase attention to aggressive reporting. Further, auditors who pay more attention to evidence of aggressive reporting are more likely to believe that intentional misstatement occurred. General audit experience was not a predictor of auditor’s attention to aggressive reporting or auditor’s judgments about intentional misstatements. Auditors with more fraud-specific experience, however, were more likely than auditors with less fraud-specific experience to believe that intentional misstatement had occurred when evidence of aggressive reporting exists.


Culture, Implicit Theories and the Attribution of Morality


Bernard Wong-On-Wing

Washington State University


Gladie Lui

Chinese University of Hong Kong


ABSTRACT: Recent research (Choi and Nisbett 1998, 2000; Choi et al. 1999; Ji et al. 2000; Nisbett et al. 2001) has repeatedly shown that compared to Westerners, East Asians pay greater attention to situational factors and endorse a more holistic theory of causality. Based on this robust finding, the present study examined the extent to which Americans and Chinese differ in their causal judgment about, and their reaction to observed fraudulent behavior. The results show that compared to Americans, Chinese were more sensitive to situational factors. They were less likely to attribute fraudulent behavior to individual dispositions, and less likely to agree to punitive measures that are directed at the target person. Implications for both practice and research are discussed.


Academic Instruction as a Determinant of Judgment Performance


William F. Wright

University of Illinois


ABSTRACT: Auditors evaluate the collectibility of commercial loans when they conduct financial audits of financial institutions. Task-specific academic instruction and practice provide for acquisition of relevant credit analysis knowledge—but the relative benefits of academic instruction and practice versus training and practical experience remain unclear (e.g., Bonner and Walker 1994; Hammond 1996). First, loan judgments made by second-year graduate business students completing an elective course in credit analysis are compared with judgments made by audit seniors with similar business experience but without any credit analysis training or experience. The graduate business students’ judgments are significantly more accurate and less biased, with more consensus, given the criterion of the mean judgment of twelve highly experienced financial institution audit partners. Second, as a test of the benefits of academic instruction and practice versus CPA firm training and practical experience, the judgments of the graduate business students are compared with judgments provided by experienced auditors (seniors and managers): similar levels of judgment performance are indicated. Models of the loan judgments of the different groups of participants based on attributes of the borrower explain why the graduate business students performed especially well.