How effective are social norm interventions? Evidence from a laboratory experiment on managerial honesty

Rajna Gibson Brandon, Alexander Wagner and Carmen Tanner

No 9880, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Social norms can act as safeguards against corporate misconduct, but can also foster undesirable behavior. We conduct a laboratory experiment where we expose participants (in the role of CEOs) to social norms approving or disapproving of earnings management. There are systematic differences among individuals' reactions to the situational pressure. Specifically, individuals with strong preferences for truthfulness react less to both kinds of social norms. Self-signaling provides a convincing explanation of individual behavior. These findings have implications for the empirical analysis of managerial behavior and for the use of social norms as steering tools for corporate governance.

Keywords: Crowding-out; Honesty; Conformity; Self-signaling; Situational social norms (search for similar items in EconPapers)
JEL-codes: C91 G02 G30 M14 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-exp, nep-hpe and nep-soc
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