This essay discusses issues related to establishing causal relationships in empirical survey research. I adopt a manipulationist view of causality because it matches the context of (management) accounting research where we are commonly interested in studying the effects of changes. Strictly speaking, causal relationships cannot be unequivocally proven when the researcher employs cross-sectional surveys—that is, correlation is not causation. Notwithstanding, survey research can be fruitfully engaged to inform pertinent management accounting topics. I discuss four “markers” of causality—theoretical coherence, empirical covariation, temporal/physical separation, and internal validity—and how the researcher can lever these to suggest compelling survey-based inferences. Of these four markers, I particularly emphasize the first as I believe that one piece of any reasonable observer’s considerations will be whether the proffered causal relationships are theoretically plausible. Moreover, a stronger theoretical foundation also helps causal inference by suggesting a reasonably complete set of control variables that are useful to eliminate alternative explanations. Overall, I focus rather pragmatically on the limitations of causal inference when using the survey method and what may be done to try and alleviate, although not eliminate, them.

Creativity and innovation have been identified by senior executives as some of the most desired characteristics of corporate culture. Accordingly, managers strive to build these cultures within their organizations. However, research in psychology suggests that these attempts may have unintended negative consequences. In this study, I predict and find that managers in a more (versus less) innovative company culture will engage in higher levels of real earnings management (REM). I then test two construal level theory (CLT)‐based interventions designed to reduce REM. As I predict, I find that in more innovative corporate cultures an intervention that makes downside risk more salient reduces REM, but an intervention that encourages managers to consider the “big‐picture” impact of their decision reduces REM to a greater extent. Unexpectedly, I also find that the effect of the “big‐picture” intervention reverses in a less innovative corporate culture leading to an increase in REM. My findings contribute to the emerging accounting literature regarding REM. I also extend the psychology literature investigating the link between opportunistic behavior and creativity, and I also expand research into how interventions based on CLT can affect judgment and decision making in an accounting context.

We examine the application of real options within two contexts of motion picture investment decisions by studio executives. The first is whether to continue marketing a film following its initial release in theaters (an abandonment option). The second centers on the decision to produce a sequel to an original film (a growth option). Few accounting studies have examined the use of real options but they are of considerable importance to companies managing risk through their cost structure and capital investment decisions. Specifically, a real option allows decision makers to postpone further expenditure commitment until a substantial portion of the uncertainty surrounding the investment has been resolved. Our evidence from the motion picture industry indicates that studios leave a portion of their marketing budget uncommitted until its spending is warranted. We also show that studios invest more in original films that they believe will lead to a sequel. Specifically, we find that studios spend higher production and marketing costs on films with sequels than those without, and that sequels generate higher returns on investment than non-sequels. Overall, our results suggest that the real options framework has applications for accounting research and practice by providing a basis for studying and understanding cost commitments in product or project-based settings.

We examine the structure of communications in accounting research by analyzing patterns of citations among authors who have published in five major journals between 1984 and 2008. Understanding communication structures is important because they shape academic knowledge creation, which prominent scholars have claimed has become narrowly focused and self-perpetuating in accounting due to a specific type of communication structure - 'tribalism.' We use a mathematical algorithm and other analyses to distinguish among five types of communication structures. We find that the field contains multiple clusters, with some clusters being centered on research topics alone, a finding consistent with a 'normal academic field.' Remaining clusters are more narrowly based – on combinations of topics, methods and theory bases – and all but one of them represent a “small world” structure because they are close together and exhibit frequent communication. Both normal academic fields and small worlds have been shown to contribute positively to innovation in research. The economics-based archival financial accounting cluster exhibits some properties of a tribal structure because, while researchers in other clusters communicate toward this cluster, the cluster sends most of its outbound communication to itself. A contribution of our study is that it shows that tribalism is not as rampant as previously suggested. Also, our findings suggest the field has become less tribal over time. Further, we identify 'hub' researchers who attract communications from multiple clusters and whose articles build on, and cite, work from multiple clusters. These individuals are instrumental in moving fields away from tribalism. Finally, we discuss possible determinants and consequences of the existing communication structure.

This paper describes the findings of a study aimed at providing an international replication of a US-based study by Gibbs et al. [Gibbs, M., Merchant, K., Van der Stede, W., & Vargus, M. (2004). Determinants and effects of subjectivity in incentives. The Accounting Review, 79(2), 409-436; Gibbs, M., Merchant, K., Van der Stede, W., & Vargus, M. (2006). The structure of incentive contracts: Evidence from auto dealerships. Working Paper, University of Chicago, University of Southern California, London School of Economics and University of Texas-Dallas] focused on the incentive compensation practices of firms in the automobile retailing industry. The purpose was to determine the extent to which these practices and their effects were similar across countries. Theory provides conflicting predictions as to whether international practices should reflect a situational "best fit" or "global best practices." We collected a dataset comparable to that of Gibbs et al. from Dutch automobile retailers. The findings reveal dramatic differences in practices across the two countries. As compared to the US firms, the Dutch firms are much less likely to provide their managers with incentive compensation in any form. Where Dutch firms do offer incentive compensation, the payouts are smaller and their bonus awards are less likely to be based on profit measures of performance. But where the Dutch firms use incentive compensation, their performance/reward functions are more complex. Moreover, unlike in the US firms, in the Dutch firms the effects of the use of incentive compensation on net profit and pay satisfaction are negative.

We examine how employees respond to bonuses and penalties using a proprietary dataset from an electronic chip manufacturer in China. First, we examine the relative effects of bonuses and penalties and observe a stronger effect on subsequent effort and performance for penalties than for bonuses. Second, we find that the marginal sensitivity of penalties diminishes faster than that of bonuses, indicating that the marginal effect of a bonus may eventually exceed that of a penalty as their value increases. Third, we find an undesirable selection effect of penalties: penalties increase employee turnover, especially for skillful and high-quality workers. These results may help inform our understanding of the observed limited use of penalties in practice due to their bounded effectiveness and possible unintended consequences. Data Availability: The confidentiality agreement with the company that provided data for this study precludes the dissemination of detailed data without the company's consent.