Advances in Accounting Behavioral Research: Volume 11

Cover of Advances in Accounting Behavioral Research

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(13 chapters)

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Pages vii-viii
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References should follow the APA (American Psychological Association) standard. References should be indicated by giving (in parentheses) the author's name followed by the date of the journal or book; or with the date in parentheses, as in ‘suggested by Canada (2005).’

This chapter discusses the benefits, limitations, and challenges in developing research projects that integrate a combination of archival, behavioral, and qualitative research methods. By demonstrating the inherent strengths and weaknesses of using a single method in isolation, this chapter aims to broaden our understanding of why and how research that examines various issues from the different perspectives is richer than employing any single method and enhances our understanding of a given accounting phenomenon. This chapter also discusses how investigating an issue through multiple research methods can help researchers improve the generalizability of findings and present a panoramic view of a particular phenomenon.

The recently passed Statement Financial of Accounting Standard (SFAS) 123R mandates that stock-option compensation costs be recognized in the income statement. This supersedes SFAS 148 and the earlier SFAS 123 which required only disclosure in the notes to the financial statements. The motivation of the Financial Accounting Standards Board (FASB) was to increase transparency in reporting of financial statements. The objective of this chapter is to test whether sophisticated users’ perceptions and judgments are affected by the different reporting format that has been mandated by SFAS 123R. Members of the Institute of Management Accountants (IMA) were used as the participants in this study. The study finds a (1) higher perceived risk, (2) lower expected accounting return, (3) more pessimistic overall perception, (4) more negative future stock price direction, and (5) lower stock price valuation by sophisticated users in the presence of recognition versus disclosure. These findings support the stance of the FASB and indicate that that information content is accentuated in the presence of recognition relative to disclosure.

The extant literature has established that industry-specialist auditors gain performance-enhancing industry-specific sub-specialty knowledge (e.g., Solomon, Shields, & Whittington, 1999) via training and on the job experience. This knowledge has been shown to allow specialists to outperform non-specialists on a range of industry-specific tasks. The current study extends this line of research by comparing and contrasting the relative performance gains enjoyed by industry-specialist auditors in two different industry settings, one regulated and the other unregulated. When specializing in regulated industries, auditors gain very detailed industry-specific knowledge which is not the case for specialists in unregulated industries (Dunn & Mayhew, 2004). By comparing industry-specialists to non-specialists with matching industry-based experience, this study measures the relative benefits of specialization in different industry settings, rather than the benefits of specialization per se, which has been well established in the literature. This study finds that the performance gains made by regulated industry-specialists significantly outweigh those made by unregulated industry-specialists on industry-specific tasks. The implications of these results for future research and practice are explored in the body of the chapter.

In this study 43 auditors of varying rank (staff/assistant, senior/supervisors, and managers/partners) and expertise level (candidates for specialty, competent specialists, and expert specialists) assessed the degree to which they believed themselves and their colleagues possessed detailed expert attributes. Definitions of 11 attributes that were found by Abdolmohammadi, Searfoss, and Shanteau (2004) to be extremely or very important to expertise in audit specialty were provided to the subjects for their assessment. As hypothesized, the possession of many attributes that can be classified as trainable and developable differed by professional rank. However, innate attributes of intelligence and quick thinker did not differ by professional rank. Also, as hypothesized, systematic biases in assessment of possession of attributes of superiors and subordinates were observed, as well as evidence of inflated bias of self by some participants. Implications for accounting practice, education, and research are discussed.

Jost et al. (2003) theorizes and finds that business students, on an average, hold a positive fair market ideology (FMI), which suggests that they believe in the power of market forces to reward ethical corporate behavior and punish unethical behavior; accordingly, they tend to make an implicit association between a company's financial performance relative to the stock market and the company's ethics. We suggest that audit education in professional skepticism and ‘red flag’ analysis will mitigate this implicit bias when a company's relative market performance is unusually distant from a referent benchmark, such as an industry average. In a between-participants experiment involving 94 non-audit and 94 audit business students, we measure their FMI, and examine how they perceive the ethicality of a company's management based on the referent direction (above or below the industry average) and referent magnitude (relatively close to or distant from the industry average) of the company's relative market performance. The results suggest that both non-audit and audit students indeed hold a positive FMI, and they ascribe favorable ethical perceptions to company performance that is relatively close to the industry average, irrespective of referent direction. When company performance is relatively distant from the industry average, neither group of students makes the implicit link. Overall, the findings do not indicate that audit education differentially affects business students’ perceptions of corporate ethics when a company's relative stock market performance deviates considerably from a referent benchmark.

Despite its widespread acceptance and application in the psychology literature, exhaustion, the core dimension of job burnout, has only recently been examined in the domain of public accounting. These studies highlighted the problem of exhaustion within the profession and examined its causes relative to the environment of public accounting. Another factor, not previously addressed in the context of public accounting, is the role personality plays on public accountants’ exhaustion. The current study addressed this void by examining how the personality traits of hardiness, workaholism, neuroticism, and Type-A behavior in public accountants affect exhaustion. The results indicated that public accountants who were high in hardiness experienced significantly less exhaustion. The role stressors of overload and conflict were also significant contributors to public accountants’ exhaustion.

Schiff and Hoffman (1996) found evidence that nonfinancial measures explain more of the variance in evaluations that focus on individual retail department managers while financial measures explain more variance in evaluations of the overall department. These findings are consistent with Attribution Theory, which holds that evaluators of performance ascribe cause to individual or environmental factors as they make judgments. This study expands this research by being the first to examine whether financial and nonfinancial measures affect multidivisional balanced scorecard performance evaluations differently when the focus of the evaluation is on the individual division president versus when the focus is on the overall division. The results of this study suggest that when evaluating individual performance, nonfinancial measures clearly affect the performance evaluations more than financial measures. When the focus is on the division, the influence of nonfinancial and financial measures is not differentiated. Additionally, the results suggest that the participants perceived nonfinancial measures to be more controllable than financial measures.

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Advances in Accounting Behavioural Research
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Emerald Publishing Limited
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