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Effects of management control systems and cognitive orientation on misreporting: an experiment

María J. Sánchez-Expósito (Department of Finance and Accounting, Universidad Pablo de Olavide, Seville, Spain)
David Naranjo-Gil (Department of Finance and Accounting, Universidad Pablo de Olavide, Seville, Spain)

Management Decision

ISSN: 0025-1747

Article publication date: 18 April 2017

884

Abstract

Purpose

The purpose of this paper is to analyze the simultaneous effect of management control system (MCS) designs (belief vs boundary) and cognitive orientations (individualism vs collectivism) on performance misreporting by combining accounting and psychology literature.

Design/methodology/approach

This paper is based on a laboratory experiment with 67 postgraduate students.

Findings

Results show that an individualist cognitive orientation increased performance misreporting. The results also showed that a boundary design of MCS intensified the relationship between individualist orientation and performance misreporting.

Research limitations/implications

This paper shed some light about the role of non-pecuniary control system for reducing managerial performance misreporting. The findings support that the tendency of individuals to avoid misreporting depends not only on the MCS design but also on the match between it and individual’s cognitive orientations.

Practical implications

Managers in organizations should consider the predominant cognitive orientation of individuals when they design MCS. They should consider that control systems, which impose coercive constraints to individuals, may encourage feelings of psychological reactance and then increase performance misreporting.

Originality/value

This study is among the first to combine psychology and accounting literature to analyze how the design of MCS influences individuals’ motivation to misreport their performance. It provided evidence about the effect of non-monetary control systems on individual’s behavior in organizations.

Keywords

Acknowledgements

The authors express their thanks for the comments received on earlier versions of this paper from Laura Gómez, Margaret Abernethy, seminar participants at the Pablo Olavide University, the Amsterdam University, and European Accounting Association Conference. The authors also acknowledge the partial funding of this research project by the Andalusia Regional Government (Project No. SEJ-2395) and the Spanish Ministry of Education and Science (Project No. ECO2014-56204P).

Citation

Sánchez-Expósito, M.J. and Naranjo-Gil, D. (2017), "Effects of management control systems and cognitive orientation on misreporting: an experiment", Management Decision, Vol. 55 No. 3, pp. 579-594. https://doi.org/10.1108/MD-09-2016-0659

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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