 Shared interest and honesty in budget reportingBryan K. Church, R. Lynn Hannan and Kuang, Xi (Jason) Accounting, Organizations and Society, 2012, vol. 37, issue 3, 155-167 Abstract: This study uses two experiments to investigate the honesty of managers’ budget reports when the financial benefit resulting from budgetary slack is shared by the manager and other non-reporting employees. Drawing on moral disengagement theory, we predict that the shared interest in slack creation makes misreporting more self-justifiable to the manager and, therefore, leads to lower honesty. Consistent with our prediction, the results of our first experiment show that managers report less honestly when the benefit of slack is shared than when it is not shared, regardless of whether others are aware of the misreporting. Our second experiment investigates whether the preferences of the beneficiaries of the slack affect managers’ honesty. We predict that managers’ honesty will be improved when the beneficiaries of the slack have a known, higher-order preference for truthful reporting. Consistent with our prediction, the results show that managers report more honestly when other employees have a known preference for honesty than otherwise. The implications of our findings for management accounting research and practice are discussed. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:37:y:2012:i:3:p:155-167 DOI: 10.1016/j.aos.2012.01.002 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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