Prediction 18 one of the most important aspects of investment decision making. This study provides evidence that investors' predictive earnings judgments can be systematically Influenced as a consequence of the combined effects of "output interference" and "availability," and that the use of financial accounting information in the prediction process seems to provide limited benefit in terms of reducing this effect. Output Interference Is a psychological concept that Implies that whatever is thought about first interferes with, and thus inhibits, later thoughts about an Issue. An availability-based prediction strategy is one in which the decision maker uses the relative number of pro versus con masons generated, and/or the ease with which such reasons can be generated, as cues in judging the likelihood of future events. Fifty-eight Investors participated in an experiment that demonstrated that the order in which they considered opposing arguments regarding the possibility of reaching a specified level of earnings had an impact on both their ability to generate supporting and opposing masons and their subsequent probability judgment that earnings would actually reach the specified level. The outcome for which the Investors were able to generate the most supporting masons was judged more probable, investors were able to think of more reasons supporting a particular outcome, not because there were more such reasons in the objective environment, but rather as a consequence of output interference. The systematic effect on judgment, although perhaps slightly reduced, persisted when investors had access to financial statements while considering the company's earnings prospects.

Although managers’ green investments have no impact on future cash flows in our experimental markets, investors respond favorably when managers make and disclose an investment and highlight the societal benefits rather than the cost to the company. Managers anticipate investors’ reaction and therefore often disclose their investment and the associated societal benefits. Managers and other shareholders benefit from investors’ reaction, but the investment cost always exceeds this benefit, demonstrating that managers make green investments because they value the societal benefits. Collectively, our findings show that both investors and managers tradeoff wealth for societal benefits and help explain managers’ corporate social responsibilty disclosures.

Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation Donald V. Moser, Patrick R. Martin; A Broader Perspective on Corporate Social Responsibility Research in Accounting. The Accounting Review 1 May 2012; 87 (3): 797–806. https://doi.org/10.2308/accr-10257 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search

Argues that the economic theory of tax reporting predicting taxpayers' responses depends on economic effects and perceptions of horizontal and exchange equity. Experiment resulting into conditions that influence the perceptions of inequity driving taxpayers' reporting decisions.

Résumé. Les travaux antérieurs qui ont porté sur la formulation d'hypothèses démontrent que les vérificateurs ont tendance, dans la formulation de leurs hypothèses initiales, à attribuer les fluctuations imprévues aux erreurs qui se produisent fréquemment dans les états financiers. L'on ne s'interroge cependant pas, dans ces travaux, sur la nature de l'incidence des hypothèses initiales sur la performance subséquente dans le diagnostic de l'erreur véritable. Les auteurs avancent que l'hypothèse formulée au départ et la capacité des vérificateurs de passer par la suite à une hypothèse différente interfèrent. Si, par exemple, l'hypothèse initiale était inexacte, il serait difficile pour les vérificateurs de changer d'hypothèse dans le diagnostic de l'erreur véritable. Plus encore, le fait d'invoquer initialement une erreur fréquente exacerberait cette difficulté. L'on a demandé aux vérificateurs‐sujets de produire une hypothèse initiale relative à l'erreur après avoir pris connaissance d'un modèle de fluctuations dans lequel les ventes et les comptes clients étaient surévalués. Une fois formulée leur hypothèse initiale, la moitié des sujets recevaient de l'information supplémentaire révélant l'existence d'une erreur très fréquente (dans la démarcation des ventes) et l'autre moitié recevaient de l'information révélant l'existence d'une erreur peu fréquente (celle de la double comptabilisation d'une même vente). Conformément à leurs prévisions, les auteurs constatent que le fait, pour les vérificateurs, d'invoquer initialement l'erreur très fréquente (soit la démarcation des ventes) par rapport à une autre erreur moins fréquente avait par la suite une incidence sur leur performance dans le diagnostic des erreurs véritables. Plus précisément, les vérificateurs qui invoquaient l'erreur très fréquente dans leur hypothèse initiale obtenaient les meilleurs résultats lorsque cette erreur était l'erreur véritable, mais ils obtenaient les résultats les moins bons lorsque l'erreur peu fréquente se trouvait être l'erreur véritable. Les vérificateurs qui invoquaient une erreur moins fréquente dans leur hypothèse initiale affichaient, pour leur part, une performance relativement bonne (c'est‐à‐dire se situant entre la performance la meilleure et la performance la moins bonne), aussi bien lorsque l'erreur véritable était fréquente que lorsqu'elle était peu fréquente. Les auteurs analysent les conséquences de ces résultats sur l'efficience et l'efficacité de la vérification.

Previous work on hypothesis generation demonstrates that auditors tend to generate frequently occurring financial statement errors as their initial hypotheses to explain unexpected fluctuations. However, such work does not examine how the initially generated hypothesis affects subsequent performance at identifying an actual error. We hypothesized that the initially generated hypothesis would interfere with an auditor's ability to subsequently switch to a different hypothesis. Thus, if the initial hypothesis were incorrect, auditors would find it difficult to switch hypotheses in order to identify an actual error. Moreover, initially generating a frequent error would exacerbate this difficulty. Auditor‐subjects were asked to generate an initial error hypothesis after seeing a pattern of fluctuations in which sales and accounts receivable were overstated. After they generated their initial hypothesis, half of the subjects were provided with additional information that was consistent with a very frequent error (sales cutoff) and the other half were provided with information consistent with an infrequent error (sales recorded twice). As expected, we found that initially generating the very frequent error (i.e., sales cutoff) versus some other less frequent error affected auditors' subsequent performance at identifying actual errors. Specifically, auditors who generated the very frequent error as their initial hypothesis performed best when it was the actual error, but performed worst when the infrequent error was the actual error. In contrast, auditors who generated a less frequent error as their initial hypothesis performed moderately well (i.e., between best and worst) both when the actual error was frequent and when it was infrequent. The implications of these results for audit efficiency and effectiveness are discussed.

We report a gift exchange experiment. Firms make wage offers; workers respond by determining an effort level. Higher effort is more costly to workers, and firms have no mechanism for punishing or rewarding workers. Consistent with the gift exchange hypothesis, workers provide more effort at higher wages, but undergraduates provide substantially less effort than MBAs. Evidence suggests this results from differences in prior work experience. Firms' nonbinding effort requests are at least partially honored, resulting in increased overall effort for undergraduates. Although higher wages are relatively more costly for lower productivity firms, workers do not provide them with more effort.