The effect of a superior's preference and process control on a subordinate's information processing strategy

Deng, Feng (Johnny)

International Journal of Behavioural Accounting and Finance, 2010, vol. 1, issue 3, pages 224-238

Abstract: The purpose of this study is to experimentally investigate whether management controls can mitigate a subordinate's biased cognitive strategy arising from a superior-subordinate goal-information asymmetry in a capital budgeting process. Goal-information asymmetry occurs when a subordinate has less knowledge of a superior's goal preference than the superior does. A subordinate's selection of an information-processing strategy in proposing an investment proposal is expected to be affected by the level of goal-information asymmetry (present/absent) which, in turn, can have detrimental effects on the effectiveness and/or efficiency of his or her judgement and decision-making. Finding management controls to mitigate these effects will improve the qualities of managers' information processing and decision making. One kind of management controls -- process justification -- is the focus of this study. The results showed that the process justification control influenced the subjects' selection of information processing strategies in reacting to the absence or presence of goal-information asymmetry.

Keywords: superiors preferences; process control; process justification; management control; information processing strategy; judgement; decision making; capital budgeting; subordinates cognitive strategy (search for similar items in EconPapers)
Date: 2010
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