Beliefs About Accountants' Risk Tendencies and Their Effect on the Integration of Accountants' Advice Regarding Expenditure Decisions
34 Pages Posted: 30 Jul 2007
Date Written: July 2007
We investigate whether stereotypes of accountants' risk preferences influence how managers integrate accountants' advice into their decisions. One key role of accountants is to provide advice that facilitates business managers' decision making. Standards of accounting call for accountants to provide objective advice, and accountants believe their role is to provide objective advice. However, stereotypes of accountants as risk averse can lead managers to treat accountants' advice as not objective and, thus, lead to biased integration of accountants' advice into managers' decisions. The results of our three experiments indicate that people believe accountants are more risk averse than general business people. This belief leads to expectations that accountants are more likely to recommend reducing rather than increasing expenditures when risk is present. As a result, decision makers integrate less (more) of accountants' advice when accountants recommend decreasing (increasing) expenditures. This is the first study to demonstrate that a commonly held belief about accountants affects how decision makers respond to information accountants provide. Accountants who realize this can take steps to ensure unbiased integration of their advice into managers' decisions.
Keywords: Advice, Decision Making, Objective, Risk
JEL Classification: M40, M46, G31
Suggested Citation: Suggested Citation