Axel Schulz

Persistence in capital budgeting reinvestment decisions - personal responsibility antecedent and information asymmetry moderator: A note

In this study we examine the effects of personal responsibility and information asymmetry on managers’ tendencies to escalate their commitment to poorly performing investment projects. Consistent with the recommendations by critics of the escalation literature (e.g. Bowen, 1987), we provided subjects with unequivocal negative project feedback. However, counter to other recent conflicting studies adopting Bowen’s recommendations, we reverted back to Staw’s (1976) original methodology and incorporated “free-choice” into our personal responsibility construct. Our results confirm Staw’s (1976) original proposition of a positive relation between a manager’s personal responsibility for a poorly performing project and his/her subsequent escalation of commitment to the project. Further, we proposed that information asymmetry moderates the relation between the level of personal responsibility and escalation of commitment. Our results did not confirm this proposition. As such, results from our study re-establish personal responsibility as an important antecedent variable to escalation of commitment.

Experimental research method in a management accounting context

In management accounting the experimental method has been under-utilised compared to other disciplines such as auditing. This paper examines considerations necessary in experimental design to ensure both internal validity and experimental realism with the aim to increase utilisation of this methodology in management accounting. Task design, experimental design, experimental procedures and post-test questionnaire design are addressed specifically as they form the basic building blocks of most experiments. This paper also examines ‘lessons’ learned both in the design and administration of the experiment to help researchers in the use of the experimental method. Potential changes to the experiment are discussed, as part of an opportunity to improve future research work using the existing or a similar experiment

Are Employee Selection and Incentive Contracts Complements or Substitutes

There is a debate in the literature as to whether employee selection is a substitute or complement to incentive contracting. We argue that incentive contracts and selection can be both complements and substitutes conditional on the contracting difficulty faced by the firm. We examine these control choices in a setting where contracting difficulties arise due to the firms choice of strategy and from the volatility created by the firms external environment. We select a firms commitment to organizational learning (OL) as our strategic choice variable as this provides a useful proxy for identifying settings where explicit incentive contracting is difficult. The results show that, as firms become increasingly committed to OL, incentive contracts and employee selection operate as complements. However, with a high commitment to OL and an increasing level of external volatility, contracting on performance measures will become less effective. In this context, our results indicate that there is a substitution effect toward employee selection.

Otra Empanada en la Parilla: Examining the Role of Culture and Information Sharing in Chile and Australia

One of the biggest assets of a firm is its information base. Included in this information base is a knowledge of prior errors and failures. Extant research suggests that while the propensity to share bad news (i.e. a prior error) is dependent on the cost of sharing, the perceived value of that cost may be culturally dependent. One area of interest that has received substantial attention in the prior literature has been cross-cultural differences in negative information sharing in general, as well as the particular context in which the individuals superior is either present or absent during the information-sharing process. Our study examines the role of the two cultural values (individualism/collectivism and to a lesser extent power distance) in explaining national differences in information sharing. By focusing on a sample from Chile and Australia, we were able to remove the regional cultural dimension of face, which has been inherent in prior studies that used Greater China as the representative of a collectivist society. Results from our quasi experiment show that when a supervisor is present during information sharing, collectivist Chilean decision-makers are more willing to share negative information with their colleagues than their counterpart and individualist Australian decision-makers. Our results also show that when a supervisor is absent, both Australian and Chilean decision-makers are willing to share more negative information but the increase in the Australian propensity is significantly greater than that of the Chileans.

Examining the Role of Culture and Acculturation in Information Sharing

In the current environment, an important firm asset is the employee knowledge base, which in a large part depends on employee willingness to share information. Yet prior research has noted that while employees are delighted to reveal success they are often reluctant to reveal errors. While there are many factors affecting managers’ reluctance to reveal errors, this study focuses on cultural differences between Chinese migrants and Anglo residents as well as the role of acculturation. This is particularly relevant given the very significant foreign direct investment into China, and migration of managers and high-end technical staff from portions of Greater China to the management and higher technical classes of the Anglo world. Prior studies including Chow, Harrison, McKinnon, and Wu (1999a). Accounting, Organizations and Society, 24, 561–582, Chow, Deng, and Ho (2000). Journal of Management Accounting Research, 12, 65–95, and Tinsley and Pillutla (1998). Journal of International Business Studies, 29(4), 711–728, provide conflicting views and evidence for differences in information sharing between Chinese and Anglo managers, and there is no accounting or management literature that deals with changes in information sharing behavior in the migration process. This study employs an experiment to test for differences in individuals’ willingness to share information about a prior costing error. Using a sample of students from two different nationalities drawn from a major Australian university (Australian and Hong Kong SAR, China), this study finds that migrant Chinese share less information than Anglo-Australians. This study further provides empirical evidence that the relative change in willingness to share this information when the supervisor is removed from the decision context is lower for the migrant Chinese than for the Anglo-Australians. Finally, this study finds evidence for acculturation as the willingness of migrant Chinese managers changes with the length of their stay in the new society. Acculturation occurs relatively quickly and highly acculturated Chinese information-sharing behavior is not significantly different from the Australian-born subjects.

Roz, Inc.: a case for extending management accounting coverage to managers' information acquisition process

Abstract Observers of the modern business environment have emphasized that if management accounting is to remain relevant to the realities of the 1990s and beyond, it has to evolve beyond the traditional “gathering, assimilating and reporting function” to encompass the processes whereby information reaches managers. The objective of this teaching case is to assist extending management accounting coverage towards this process. In both Australia and Taiwan, we have successfully used this case to supplement text and end-of-chapter materials at both the advanced undergraduate and graduate levels. The similarity of our teaching experiences between Australia and Taiwan, in conjunction with the generic nature of the case, suggest that it can be used in other national contexts with little or no modification.