The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors

Sebastian Goebel () and Barbara Weißenberger ()
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Sebastian Goebel: Justus Liebig University Giessen
Barbara Weißenberger: Heinrich Heine University Düsseldorf

Schmalenbach Business Review, 2016, vol. 17, issue 1, No 5, 69-101

Abstract: Abstract Following recent corporate accounting scandals and governance failures, there has been a renewed interest in dysfunctional employee behaviors as potential drawbacks of financial goal-setting. Our study therefore assesses the impact of tight financial results controls as a cause for common behavioral displacements like information manipulation or gaming behavior in combination with countervailing effects of informal controls and management accountants’ business orientation as potential remedies. Based on a cross-sectional survey among 295 large- and medium-sized companies, our results show that even though a strong emphasis on financial results controls is associated with dysfunctional behaviors, higher levels of informal means of control and a more intense business orientation of management accountants are associated with a decrease of behavioral displacements. Our paper contributes to literature in a twofold way. First, it adds to the extant management accounting and control literature by providing comprehensive insights into the interplay between tight financial controls, informal controls, and management accountants’ role-taking behaviors. Second, by using a large-scale survey design, our results reflect a broad array of organizations and control situations.

Keywords: Tight financial results controls; Dysfunctional employee behaviors; Informal controls; Management accountants’ business orientation; Structural equation modeling; M100; M140 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s41464-016-0005-8

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