Advances in Management Accounting: Volume 34

This study examines the effects of narcissism and bonus-based incentive plans on managerial decision-making performance. Using an experiment, the authors first examine decision choices under two levels of an incentive threshold (high and low). Narcissism is measured using the Narcissistic Personality Inventory (NPI). Typically, the NPI is used as a single monolithic construct in analyses; however, in this study, the authors subdivide it in two ways to gain more nuanced information about its impact on decision making. First, the authors split the NPI into three levels – high, medium, and low (Hascalovitz & Obhi, 2015), and then decompose it into its adaptive and maladaptive components (Campbell, Hoffman, Campbell, & Marchisio, 2011) to examine how these subdivisions affect performance. Results show that the different levels of incentive thresholds affect performance among narcissistic individuals. Results indicate that individuals higher in narcissism and higher in levels of adaptive and maladaptive narcissism outperform their low-trait counterparts in a lower-threshold environment, but not in a high threshold environment.

Many companies use competition for either monetary or non-monetary rewards to induce employee effort. Pitting employees against each other in a competition could come at a thus far insufficiently considered cost of leading to lower employee cooperation. The authors examine how competition for monetary rewards in the form of tournament incentives or non-monetary rewards in the form of standing in uncompensated public rankings affects employee cooperation with former competitors in a subsequent task where the extent of the cooperation does not affect the welfare or social standing of the person deciding to cooperate. The authors hypothesize that competition in the first task negatively affects cooperation in the second task. The authors further predict that competition leads to psychological pressure, which mediates differences in cooperation. The results support the authors’ hypotheses. In addition, the authors find that the decrease in cooperation results from the behavior of low performers, whereas cooperation by high performers is not affected. The findings are important because they show that inducing effort in one dimension leads to an unintended cost in the form of lower cooperation in another dimension. This cost occurs for both types of competition – competition for monetary payoffs and for non-monetary rewards. Ultimately, the size of this cost depends on the marginal benefit from any cooperation of low performers.

This paper examines the relationship between transportation quality, customer satisfaction and profitability. Specifically, this study examines the simultaneous and asynchronous effect of quality of transportation services on customer satisfaction and financial performance and then performs the same examination in relation to the effect of customer satisfaction on financial performance. The partial least squares approach to structural equation modelling is used to examine longitudinal data from 1995 to 2018 from the US airline industry. The findings suggest that low service quality in transportation has adverse effects on customer satisfaction and financial performance, while the impact of customer satisfaction on financial performance in the US Airline transportation industry is mixed. The authors found that the impact of customer satisfaction on financial performance is significant in full-service airlines but not in low-cost airlines. Surprisingly, the authors found no significant direct relationship between transportation quality and financial performance in the US airline industry.

This study examines the association between management control systems (MCSs), specifically the interactive and diagnostic use of controls, with the corporate social responsibility (CSR) disclosure-action portrayal gap (i.e. the disparity in employees’ perception of their organisation’s emphasis on CSR disclosures relative to CSR actions) and the subsequent impact on employees’ perceptions of organisational performance, both operational performance and corporate social performance. Data were collected using a survey of US lower-level managers, with the data obtained from 209 respondents and analysed using structural equation modelling (SEM). The results reveal that the interactive and diagnostic use of controls both exhibit a significant negative association with the CSR disclosure-action portrayal gap, that is, the use of these controls reduces the gap. In addition, the various dimensions of the CSR disclosure-action portrayal gap exhibit a significant negative association with both operational and corporate social performance, that is, lower gap, higher performance. The study contributes to the CSR literature by providing the first empirical insight into employees’ perception of both CSR disclosures and actions, and hence, the CSR disclosure-action portrayal gap. In addition, the study contributes to the MCS and organisational performance literature by providing the initial empirical insight into the role of MCSs in mitigating the gap through enhancing the interactive and diagnostic use of controls, and the negative association between the gap and employees’ perceptions of organisational performance.

The emerging roles of management accountants as either hybrid accountants or business partners are a cause for much debate in the literature. Of the two characteristics related to these roles, namely information provider and interpreter, and decision-maker, the latter remains under-researched. The present study adds to the decision-maker debate by examining business decision-making involvement. Survey responses from a diverse sample of mostly Institute of Management Accountants (USA) and Chartered Institute of Management Accountants (UK) members were obtained and analysed to examine their current business decision-making involvement, including an investigation guided by role theory into possible contextual factors associated with different levels of decision-making involvement. The business decision-making involvement of management accountants varies significantly, and is less pervasive than widely believed. A significant proportion (53%) of management accountants in traditional management accounting positions report no, or limited, business decision-making involvement. Management accountants employed in smaller firms, and middle-aged professionals, are more likely to be involved in making business decisions. The inverted u-shaped association between age and decision-making involvement identified in this study, requires further investigation. The large cross-sectional analysis of the present study extends prior research which was mostly narrowly focussed due to its case study nature. The varying levels of decision-making involvement, and contextual variables associated with higher level involvement, shed some light on the intricacies of the role of management accountants. Professional associations and educators should note that the roles of today’s management accountants vary greatly between information provider and decision-maker.

This study aims to examine the mediating role of organisational fairness on the association between the emphasis on budgets and budget difficulty with budget value and job stress. Data were collected using an online survey questionnaire with 515 responses from middle and lower-level managers in Australian business organisations. The results indicate that organisational fairness fully mediates the association between budget difficulty with both budget value and job stress. Organisational fairness was not found to mediate the association between the emphasis on budgets with budget value and job stress. Rather, the emphasis on budgets was significantly negatively associated with job stress, implying that a greater emphasis on budgets is desirable in alleviating job stress. The findings have important implications for practice.

This study uses a budgeting experiment to examine the effects of peer influence and firm earnings position on managerial honesty. In the experiment, participants report production costs to request funds from the firm based on their actual private cost information. The firm’s earnings position is manipulated at two levels, a gain condition and an edge condition, and the authors find that participants overstate costs (i.e., are less honest) to a greater extent in the dishonest peer influence condition than in the honest peer influence condition. The authors also find that the effect of peer influence on managerial honesty is context dependent. Specifically, participants respond to both dishonest and honest peer influence in the gain condition but they do not respond to peer influence in the edge condition. This study provides evidence for honest peer influence on honesty and it highlights the role of earnings position on the effect of peer influence on honesty. Controlling the disclosure of certain peer information is not possible because individuals can learn about peer information (honest or dishonest) formally or informally. Such uncontrollable peer information may be harmful to firms. The results suggest firms that provide managers with the consequences of managerial budgeting on the firm operational outcomes can neutralize the effect of peer influence on managerial honesty when managers’ budgeting decisions significantly affect firm profits.

This study investigates the effect of honesty reminders on budgetary slack. Based on self-concept maintenance theory, the authors posit that honesty reminders can reduce budgetary slack by making people more aware of their own standards of honesty, resulting in more honest behavior. Using an experimental research design, the authors find evidence that honesty reminders reduce budgetary slack. The authors also find that although penalties can similarly reduce budgetary slack, they tend to cause distrust and resentment from subordinates. Therefore, honesty reminders may be a less costly method than penalties for reducing budgetary slack.