Knowledge that Transforms

Although accepting that the Discounted Cash Flow model of investment appraisal has well known technical limitations, researchers have begun to explore its performative properties. This paper demonstrates how the Discounted Cash Flow model frames negotiations between actors around narratives of economization, marketization and financialization in a regulated industry. Reconnecting economics and politics, the theory of Cultural Political Economy is used to interpret and evaluate an empirical study of Great Britain's electricity generating industry. Although alternative imaginaries, based on political and employment goals, have historically influenced investment decision making in the industry, the current narrative of investment appraisal is dominated by Discounted Cash Flow models. These models have allowed industry players to construct imaginaries of an investment hiatus, leading to the possibility of future power cuts and blackouts, and a need for guaranteed prices.

Food systems in Europe, North America and Australasia are dominated by a small number of supermarkets supplying over 70% of the food consumers buy, and the model is being translated into other markets such as the Middle East and Asia. Relationships between suppliers and supermarkets are contentious in all such systems. Here, interviews were carried out with representatives of three major grower-packers supplying between them around 50% of the UK's fresh produce. We were interested in three questions, namely: how performance measurement, risk management and communication of accounting information are used by intermediaries in an allegedly unfair commercial environment; the extent to which the accounting and control practices observed support perceptions that suppliers in supermarket-dominated supply networks are treated unfairly; and what accounting and control practices would be indicative of fair commercial relationships? Researchers in the cross-disciplinary literature use John Rawls' theories of ‘justice as fairness’ in this context. Recent developments in business ethics and philosophy apply his theories to questions of relational power and fairness in commercial relationships. We follow these writers to understand where, if at all, the perceived unfairness of these food systems lies. Our empirical work and analysis can make an initial contribution from the discipline to this debate, because it has the potential to show how accounting and control practices are at the centre of the fragilities of the wider system, and of possible remedies.

Bennett and Hatfield (2018) conduct a role-playing experiment that provides important evidence on how face-to-face communication enhances the professional skepticism of auditors' inquiries, relative to written (email) communication. However, their study captures only part of the richness of auditor-client communication, with findings that could possibly interact with the effects of computer-mediated communication on the propensity for auditors to undertake an inquiry (e.g., Bennett & Hatfield, 2013) or on how client personnel choose to respond (e.g., Saiewitz & Kida, 2018). Experiments of this nature are limited by the fact that participants play only one role, with the other role fixed by design. This commentary challenges future researchers to push the frontier beyond these settings by considering the potential for truly interactive studies that examine how auditor and client personnel respond to each other.

Managers are increasingly aware that strategic judgments need to be made in the context of risk assessments. It has been proposed that strategic performance management systems, such as the balanced scorecard (BSC), offer a useful framework for integrating strategic risk and performance information to provide managers with a more comprehensive overview of their strategy. In this study, we conduct an experiment to investigate whether integrating strategic risk information in a BSC affects managers' responses to different strategic risk profiles when making strategy evaluation and recommendation judgments. Specifically, we provide strategic risk information either as a stand-alone list (a stand-alone approach), or incorporated in a BSC (an integrated approach). We also vary the risk profile of the strategy provided, by manipulating whether the strategy has relatively higher risks associated with performance drivers (high performance driver risks) or relatively higher risks associated with performance outcomes (high performance outcome risks). Our results show that managers make less favorable strategy evaluation and recommendation judgments with high performance driver risks than with high performance outcome risks when strategic risk information is integrated in a BSC, but not when the strategic risks are presented as a stand-alone list. While we find a significant difference in strategic risk profile effects between the two presentation formats for strategy recommendation judgments, this difference is not significant for strategy evaluation judgments. Overall, our study shows that how organizations choose to combine the reporting of strategic risk and performance information is important for managers making strategic judgments.

This paper describes how managers attempt to motivate subordinate cooperation through the actions they take to apply controls and build trust. Results obtained from interviews and a survey of practicing managers detail how managers work to motivate particular types of subordinate cooperation using specific forms of control and demonstrations of their trustworthiness. These results also indicate that relationships between the forms of cooperation managers seek to promote and their demonstrations of trustworthiness are mediated by the controls they apply. Three relationships are identified in this study. Managers' applications of results controls mediate the relationship between their desires to motivate superior-subordinate work coordination and their demonstrations of reliability; 2. Managers' applications of action controls mediate the relationship between their desires to motivate subordinate job engagement and their demonstrations of competence; 3. Managers' applications of personnel controls mediate the relationship between their desires to motivate positive interpersonal relationships with their subordinates and their demonstrations of benevolence. These findings advance our knowledge of fundamental relationships in control-trust dynamics by presenting observations of managers' trust-building activities, displaying how managers' trust-building activities are related to the controls they apply, and delineating how managers attempt to motivate subordinate cooperation through applications of particular forms of controls and demonstrations of their trustworthiness.

The audit review process is a key quality control mechanism. Recent evidence from practice suggests that regulatory risk has made reviews more critical, and audit supervisors are struggling with how to effectively deliver the “tough message”. We contribute to the audit review literature by providing an in-depth understanding of the subordinate's perspective, focusing on the understudied topic of negative feedback and factors that might moderate its effects. We investigate these issues using an experiential questionnaire soliciting subordinate auditors' reactions to highly salient actual review experiences. We find both adverse and beneficial reactions to more negative feedback, including worse attitudes toward coaching relationships, more attempts to manage supervisors' impressions, but greater performance improvement efforts. These reactions are moderated by the subordinate auditor's feedback orientation (i.e., receptivity), and sometimes by the supervisor's goal framing (i.e., emphasis on learning versus performance). Collectively, participants more often chose engagement over workpaper reviews to represent their most salient experiences, and some results differ between these review contexts. Qualitative analysis identifies both similarities and differences in key attributes of these review types. These results are important, as the audit review literature predominately considers workpaper review, and no study compares the two review contexts.