Accounting Information Aggregation and Managerial Cooperation
55 Pages Posted: 20 Aug 2013
Date Written: August 16, 2013
When managers face incentives against cooperation, accounting information can increase managerial cooperation when it allows managers to perfectly verify the cooperativeness of others’ prior actions. The extent to which accounting information facilitates perfect verification of others’ prior actions, however, can depend on its aggregation. This dissertation provides theory-consistent experimental evidence of the effects of accounting information aggregation on managerial cooperation when managers face incentives against cooperation. Based on the psychology theory of non-consequential reasoning, I predict and find that managerial cooperation is higher when accounting information is aggregated and individuals cannot perfectly verify others’ prior actions than when accounting information is disaggregated and individuals can perfectly verify others’ prior actions. The experimental results indicate that individuals are more likely to use non-consequential reasoning when accounting information is aggregated than when it is disaggregated. As a result, they are more likely to frame decisions as group decisions and cooperate because it is the only action that leads to the best group outcome.
Keywords: aggregation, consequential reasoning, managerial cooperation, prisoner’s dilemma, sure-thing principle
Suggested Citation: Suggested Citation