SEMINAR CANCELLED Crowding Out Intrinsic Motivation for Honest Reporting with Informal Controls: An Experimental Examination Using the Superior’s Choice of an Information System

ABS Accounting Seminar

We examine the ability of informal controls to crowd out intrinsic motivation for honest reporting using the superior’s choice of an information system in a participative budgeting setting. Consistent with prior results, we observe a strong positive effect on honest reporting when the information system is randomly assigned. When the information system is chosen by the superior, however, this positive effect is significantly reduced. This reduction is attributable to the behavior of subordinates who measure high in norm sensitivity and thereby have intrinsic motivation for honest reporting. An analysis of exit questionnaire responses suggests that both high and low norm sensitivity subordinates viewed the superior’s choice of an information system as a signal of distrust, but only high norm sensitivity subordinates felt less obligated to report honestly as a result. This study extends the crowding out effect to informal controls and provides evidence regarding the underlying factors behind this effect.

*Co-authored with Heba Y. Abdel-Rahim (University of Toledo) and Jing Liu (Chapman University)