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Abstract:
This paper presents theoretical analysis and longitudinal field-study evidence that the effect of responsibility-center performance measurement and management control system (MCS) boundaries on organizational performance depends on whether organizations have a strategy of continuous or discontinuous organizational process change. Using social psychology theory, we develop a model consisting of three expectations of how continuous or discontinuous organizational process change influences responsibility-center performance measurement and competitive or cooperative MCS boundaries. In turn, these measurements and MCS boundaries have a disordinal interactive effect on responsibility-center managers' revelations of their private knowledge that is needed to identify and extract organization-wide performance gains from the organizational process change. The evidence presented from the longitudinal field study provides support for the theoretical model.

Abstract:
This study provides theory-consistent field evidence on how managers reduce information asymmetries by hardening soft accounting information. The accounting information that requires hardening is soft special-purpose accounting information that is potentially biased (e.g., ad hoc activity-based costing, ad hoc benchmarking, special accounting studies) for use outside the relevant range of routinely reported general-purpose accounting information. Once hardened, this information will be used to solve a non-routine organizational problem caused by an economic crisis (e.g., achieving managerial agreement on a plan to rapidly reduce controllable costs by 50 percent to enable their organization to survive). The causal mechanism for hardening soft accounting information is social persuasion, which consists of information and management triangulation to identify, correct, and elaborate on differences and similarities in multiple sets of accounting information. Social persuasion is expected to require comparable special-purpose accounting information (accounting information that identifies similarities and differences among multiple measures of identical and/or similar cost objects such as activities, subunits, and processes) and competitive assessment (debates about the hardness of the accounting information among managers who are winners and losers from hardening the soft special-purpose accounting information when the information is used to solve a non-routine problem). The field evidence reported supports this expectation.

Activity-based costing, benchmarking, comparable accounting information, cross-functional groups, hardening accounting information, information triangulation, management triangulation, social incentives, social persuasion, special accounting studies, special-purpose accounting information

Abstract:
This study replicated Evans, Heiman-Hoffman and Rau's (1994) [hereafter, EHR] US study, using Chinese MBA students as participants. The Chinese students acted as owners and selected one of two control systems. One control system requires truthful reporting and the other control system permits the manager to falsify the report. The two systems have the same expected payoff to the owner if the owner believes that the manager will always lie when given the opportunity. If the owner believes that there is any probability that the manager will tell the truth, then the more lenient system has the higher expected payoff. We compared the US versus Chinese control system choices, and examined whether the Chinese owner-participants would be willing to sacrifice wealth to get accountability. The results indicate that a significant proportion of Chinese participants do have an accountability demand for information, and that this proportion is at least as high as that of the US participants in EHR.