Christopher J. Wolfe

Knowledge Sharing: The Effects of Incentives, Environment, and Person

ABSTRACT: We study factors that promote knowledge sharing in a professional service firm. We performed two laboratory experiments with MBA students acting as participants. Our results indicate that an incentive must be considered sufficient to promote full knowledge sharing regardless of the incentives type (monetary or nonmonetary). However, we find that the nonmonetary incentives used in our experiment were not deemed sufficient when participants self‐determined incentive sufficiency. Additionally, when the peer environment promoted knowledge hoarding, knowledge sharing dropped the most when incentives were initially deemed sufficient. Finally, we find that competitive individuals are active sharers of valuable, proprietary knowledge only when heir competitiveness is team‐oriented. To promote knowledge sharing, our results suggest careful monitoring of perceived incentive sufficiency, especially in the case of nonmonetary incentives, and a culture that directs employee competitiveness between teams.

The effects of system design alternatives on the acquisition of tax knowledge from a computerized tax decision aid

Accounting firms are intensifying their reliance on experiential learning, and experience increasingly involves the use of computerized decision aids [Messier, W. (1995) Research in and development of audit decision aids. In R. H. Ashton & A. H. Ashton, Judgment and decision making in accounting and auditing (pp. 207‐230). New York: Cambridge University Press]. Accountants are expected to learn from automated decision aid use, because the aids are not always available when dealing with the aid’s topical matter, and the knowledge inherent in the aid is needed for competency on broader issues. To facilitate knowledge acquisition and explain the logic of the underlying processes, computerized decision aids provide the rationale for their calculations in the form of online explanations. We study how the location of explanations in a computerized decision aid aAects learning from its use. Specifically, this research extends the existing literature by using a framework for the study of learning from decision aid use and by using cognitive load theory to explain the failure of certain decision aid design alternatives to promote learning. We define learning as the acquisition of problem-type schemata, and an experiment is performed in which cognitive load is manipulated by the placement of explanations in a computerized tax decision aid to determine its eAect on schema acquisition. Schemata are general knowledge structures used for basic comprehension, and cognitive load refers to the burden placed on working memory when acquiring schemata. We find that increased cognitive load produced by the location of explanations in a decision aid leads to reduced schema acquisition. Our results indicate that when explanations in a computerized decision aid are integrated into its problem solving steps, cognitive load is reduced and users acquire more knowledge from aid use. This appears to be an important design consideration for accounting firms buying or building computerized decision aids. # 2000 Elsevier Science Ltd. All rights reserved.

Judgmental adjustment of forecasts: A comparison of methods

Abstract Attention has recently been given to combinations of subjective and objective forecasts to improve forecast accuracy. This research offers an extension on this theme by comparing two methods that can be used to adjust an objective forecast. Wolfe and Flores (1990) show that ARIMA forecasts can be judgmentally adjusted by analysts using a structured approach based on Saatys analytic hierarchy process (AHP). In this study, the centroid method is introduced as a vehicle for forecast adjustment and is compared to the AHP. While the AHP allows for finer tuning in reflecting decision maker judgement, the centroid method produces very similar results and is much simpler to use in the forecast adjustment process.

Why Wait? Modeling Factors that Influence the Decision of When to Learn a New Use of Technology

This study examines the decision of when potential system users choose to learn new uses of technology. To explain the outcome of this decision, we construct a model based on deferral option pricing theory and operationalize its parameters through constructs consisting of anticipated emotions regarding failure costs, waiting costs, and potential rewards. Additionally we operationalize and test alternative explanations defining the outcome of when a new use of technology is learned and these consist of perceived usefulness of the technology, time pressure, and subjective norms. These decision determinants are examined across two experiments; each experiment using a vignette‐based methodology that evokes a different level of external motivation. In the case of a powerful external referent, subjective norms appear to crowd out intrinsic responses and they dominate the decision to learn a new use of technology. However, when an external referent does not dominate the decision setting, anticipated emotions in ...

Do Critical Audit Matter Paragraphs in the Audit Report Change Nonprofessional Investors’ Decision to Invest?

SUMMARY: Both U.S. and international standard setters have recently proposed changes to the standard audit report, including a requirement to include a critical audit matter (CAM) paragraph. We examine how nonprofessional investors react to an audit reports CAM paragraph that is centered on the audit of fair value estimates. We perform an experiment with nonprofessional investors who are business school graduates who invest in individual stocks and analyze company financial data. We find that investors who receive a CAM paragraph are more likely to change their investment decision than are investors who receive a standard audit report (an information effect) or investors who receive the same CAM paragraph information in managements footnotes (a source credibility effect). We also find that the effect of a CAM paragraph is reduced when it is followed by a paragraph offering resolution of the critical audit matter. Our findings should be of interest to regulators and standard setters as they consider the ...

Negotiation Support Systems in Budget Negotiations: An Experimental Analysis

This paper reports the results of an experiment investigating the differences between budget negotiations conducted on an electronic negotiation support system (NSS) and those conducted face-to-face. The negotiation setting consisted of a supervisor and a subordinate negotiating a performance budget for the subordinate. Results revealed that when supervisor performance expectations were incongruent with subordinate capability, face-to-face negotiations hit impasse at a significantly higher rate than NSS negotiations. These results held regardless of the amount of concession needed to reach consensus, and they support the contention that single-issue distributive negotiations, such as budget negotiations, can benefit from the use of an NSS. In a secondary analysis of subordinate performance after the budget negotiation, we found that NSS subordinates perceived more task conflict, which positively influenced postnegotiation performance, whereas face-to-face subordinates perceived less relational conflict, which worked through satisfaction to positively influence postnegotiation performance. This result adds to the literature by clarifying the roles that communication mode plays in a negotiation and a negotiations aftermath.

Reporting Financial Results with the Video Medium: An Experimental Analysis

This research uses an experimental approach to study the user effects of a video financial report compared to a paper financial report. We hired professional actors and created newscast‐type videos of a fictitious companys management discussion and analysis section of the annual report. The experimental task involved either viewing a video financial report or reading a paper financial report. After viewing/reading the financial report, subjects judged their personal opportunity with the firm (i.e., career and investment) and firm quality. Additionally, they rated perceptions gathered from the report, and they were tested on recall from the report. Overall, our results indicate that video report users rate personal opportunity with the firm in the report higher than do paper report users, but paper report users recall more about the firm and rate the quality of the firm higher than do video report users. We also find that personal opportunity judgments are more influenced by emotive perceptions of the fin...

How do auditors address control deficiencies that bias accounting estimates

Auditors commonly rely on reviewing managements estimation process to audit accounting estimates. When control deficiencies bias the estimation process by creating omissions of critical inputs, standards require that auditors replace or supplement review of managements estimation process with tests that can identify the omissions. Importantly, overreliance on reviewing managements estimation process when it has been biased by a control deficiency can result in auditor acceptance of an inappropriate accounting estimate. We use an experiment to examine whether auditors recognize the insufficiency of increased sampling of a biased estimation process and their selection of alternative tests to replace or supplement review of the biased estimation process. We find that a significant minority (33 percent) of Big 4 senior auditors erroneously increase tests of managements biased estimation process. We also find that auditors have difficulty selecting alternative tests to replace or supplement review of managements biased estimation process, frequently choosing tests that are either ineffective or inefficient. Our findings suggest that auditors often reach inappropriate judgments about the capability of audit evidence to address control deficiencies and that nonsampling risk (judgment risk) may be a larger risk than auditors realize.

The Analytical Hierarch Process – An Aid To Decision Making

Multiple‐alternative decisions are commonplace in the business environment. The Analytical Hierarchy Process (AHP) in a business institution is a decision aid which is extremely useful for multiple‐alternative decisions. The AHP prioritizes competing alternatives by assigning percentage points to each alternative in a decision. An explanation of the AHP and its use are given in this article. AHP applications covering forecasting, pricing and budgeting decisions are also discussed. The quantitative rankings generated by the AHP offer the decision maker insight and rigor unavailable in a purely judgmental analysis. A common problem for managers is the quantification of judgmental data. Group and individual judgments are sometimes made on an ad hoc basis with little or no documentation supporting the decision process. Alternative courses of action often are not formally ranked as to their relative importance. Questions concerning the importance of assumptions which surround decisions remain unanswered. A methodology to prioritize alternatives and assumptions in the decision process could aid in solving problems that rely on human judgment.