Growing calls for expanded disclosure on managerial stewardship raise important questions about how finer (i.e., disaggregated) reporting, when paired with discretion over classification, will influence managerial behavior. To study this question, we develop an investment game in which, if the investor chooses to invest, the manager privately observes production costs, chooses their personal pay, and provides a cost report in one of three reporting regimes: aggregated, disaggregated without discretion, or disaggregated with discretion. In Experiment 1, as predicted, managers report lower personal pay under both disaggregated regimes than what they consume under the aggregated regime. Yet, when disaggregated reports allow for discretion, managers misclassify personal pay as production costs to such an extent that their actual consumption is no different than in the aggregated condition. In Experiment 2, we allow managers to choose either an aggregated report or a disaggregated report with discretion. We find that, rather than remaining silent, the vast majority of managers still prefer the opportunity to report on their pay explicitly so that they can use their reporting discretion to appear trustworthy, despite not actually being so. In summary, our evidence suggests a strong weight of preferences for appearing trustworthy in the managers' utility function, a much lower weight for actually being trustworthy, and little evidence that preferences for being honest are strong enough for discretionary disaggregated reporting to curb agency costs. In other words, whether disaggregation can reduce agency costs will depend on managers' reporting discretion. Our findings have important implications for control system designers, financial and sustainability accounting standard setters, and regulators.

Global practices such as offshoring and expatriation of employees increase cross-cultural interactions within and across firms. In this paper, we use three experiments to investigate the effects of cultural differences on employees' interpretations of employers' contract choices. Applying insights from attribution theory, we predict that cultural differences will reduce the likelihood for employees to attribute employers' choice of a more-trusting contract to trust. This in turn will reduce the ability of such contracts to motivate higher employee effort. However, we also suggest that three interventions will mitigate the negative effect of cultural differences: employees' prior and primed exposure to employers' culture and employees' interactional cultural intelligence. In our labor market setting, employers chose a hiring contract for employees who, in return, indicated their effort levels. In all experiments, dyads interacted in real-time either in the same country or across two countries with high cultural difference. Consistent with our predictions, we find that the effectiveness of a bonus contract in increasing employees' effort is reduced by high cultural difference (in experiment 1). We also find that employees' exposure to employers' culture, either due to prior exposure (in experiment 2) or by priming exposure through culture-specific training (in experiment 3) has a mitigating effect. Finally, we find partial support that employees’ interactional cultural intelligence (CQ) has a mitigating effect. Implications to theory and practice are discussed.