Based on prospect theory (Kahneman & Tversky (1979). Econometrica, 47, 263–291; Tversky & Kahneman (1992). Journal of Risk and Uncertainty, 5, 297–323), we predict that the negative effect on managers’ support for ABC in business units reporting less profit is greater than the positive effect on managers’ support in the more profitable units. The results of an experiment support this prediction. Since management support is critical to successful system implementation, this asymmetric effect has implications for cost management system changes.
Fennema, M., Rich, J. and Krumwiede, K. (2005), "Asymmetric Effects of Activity-Based Costing System Cost Reallocation", Arnold, V. (Ed.) Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 8), Emerald Group Publishing Limited, Bingley, pp. 167-187. https://doi.org/10.1016/S1475-1488(04)08007-XDownload as .RIS
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