Knowledge Transfer in Project Reviews: The Effect of Self-Justification Bias and Moral Hazard

19 Pages Posted: 31 Jan 2009

See all articles by Mandy M. Cheng

Mandy M. Cheng

UNSW Australia Business School, School of Accounting

Axel K-D Schulz

La Trobe University

Peter Booth

University of Technology Sydney (UTS) - School of Accounting

Abstract

In this study, we examine two factors that impact managers willingness to share private information during the project review stage of capital budgeting. Drawing on the cognitive dissonance theory and the agency theory, we find that both high perceived personal responsibility and the use of project reviews for performance evaluation result in a greater tendency for managers to withhold negative private information. However, we do not find an interaction between these two factors. Our study makes a contribution to both the academic literature investigating factors affecting project reviews and the practitioner literature looking at design and implementation of effective project reviews.

JEL Classification: G31, G34, D82, M40, M46

Suggested Citation

Cheng, Mandy M. and Schulz, Axel K-D and Booth, Peter, Knowledge Transfer in Project Reviews: The Effect of Self-Justification Bias and Moral Hazard. Accounting & Finance, Vol. 49, No. 1, pp. 75-93, March 2009. Available at SSRN: https://ssrn.com/abstract=1335538 or http://dx.doi.org/10.1111/j.1467-629X.2008.00271.x

Mandy M. Cheng (Contact Author)

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia
(612) 9385.6343 (Phone)

Axel K-D Schulz

La Trobe University ( email )

Victoria 3552, 3086
Australia

Peter Booth

University of Technology Sydney (UTS) - School of Accounting ( email )

P.O. Box 123
Broadway NSW 2007
Australia

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