The Impact of Accounting Contextual Variables on Negotiator's Perceived Risk, Trusting Behavior and Negotiation Outcomes

39 Pages Posted: 11 Aug 2008 Last revised: 4 Nov 2008

See all articles by Andrea Drake

Andrea Drake

Louisiana Tech University

Susan F. Haka

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Michelle Lau

Michigan State University

Fabienne Miller

Worcester Polytechnic Institute

Date Written: November 2, 2008

Abstract

We explore how two key aspects of accounting information affect trusting behavior between unknown parties in a bilateral negotiation. The two aspects include the fineness/coarseness of cost information that can be utilized during the negotiation and the profit/loss frame induced by accounting information going into the negotiation. Based on several streams of literature related to trust, we develop a theoretical model of the antecedents and consequences of trusting behavior. Specifically, we provide a model linking accounting contextual variables to perceived risk, trusting behavior, and negotiation outcomes. We conducted an experiment using 148 participants (74 negotiating pairs) to test our hypothesized model. We measured trusting behavior as the negotiator's choice to share or not share private cost information with their negotiating partner. The consequences of trusting behavior include the economic outcome of the negotiation as well as the negotiator's perceived satisfaction with the negotiation process and with the other negotiator. Our main findings demonstrate that accounting information fineness is negatively related to trusting behavior and a loss frame is positively related to trusting behavior. Furthermore, we find significant and positive links between trusting behavior and both economic outcomes and satisfaction with the negotiation process. Overall, our study contributes to the literature by establishing a more comprehensive model of the relationships between aspects of accounting information, risk perceptions, trusting behavior, and negotiation outcomes.

Keywords: trust, negotiation, accounting information characteristics, risk propensity, fineness

Suggested Citation

Drake, Andrea and Haka, Susan F. and Lau, Michelle and Miller, Fabienne, The Impact of Accounting Contextual Variables on Negotiator's Perceived Risk, Trusting Behavior and Negotiation Outcomes (November 2, 2008). AAA 2009 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1218602 or http://dx.doi.org/10.2139/ssrn.1218602

Andrea Drake (Contact Author)

Louisiana Tech University ( email )

School of Accountancy
P.O. Box 10318
Ruston, LA 71272
United States

Susan F. Haka

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

East Lansing, MI 48824-1121
United States
517-432-2920 (Phone)
517-432-1101 (Fax)

Michelle Lau

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

Fabienne Miller

Worcester Polytechnic Institute ( email )

Worcester, MA 01609
United States
508-831-6128 (Phone)

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