 The effects of performance-based incentive frequency on collusionAshley K. Sauciuc Accounting, Organizations and Society, 2025, vol. 114, issue C Abstract: A common set of problematic conditions exist across many of the most egregious cases of collusion in recent decades (e.g., Enron, WorldCom, Wells Fargo), including weak internal control systems, intense pressure to reach nearly impossible targets, and social pressure that encourages employees to trade their own morals to conform with group norms. I capture this core set of conditions in a carefully designed laboratory experiment to examine whether and how an important element of compensation contracting—incentive frequency—may foster adverse norms. Specifically, I predict and find that incentive frequency influences how individuals rationalize collusion, thereby affecting the reporting norms that develop within groups. Groups with relatively infrequent incentives oscillate between collusion and truthful reporting, consistent with moral licensing behavior; whereas frequent incentives produce a spillover effect whereby collusion persists, consistent with ethical erosion. These results have important implications for compensation design and the use of management control systems. Keywords: Incentive frequency; Collusion; Ethical erosion; Moral licensing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:114:y:2025:i:c:s0361368225000030 DOI: 10.1016/j.aos.2025.101591 Access Statistics for this article Accounting, Organizations and Society is currently edited by Christopher Chapman More articles in Accounting, Organizations and Society from Elsevier |
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