Accounting Information Aggregation and Managerial Cooperation

55 Pages Posted: 20 Aug 2013

See all articles by Eric Marinich

Eric Marinich

Miami University of Ohio - Richard T. Farmer School of Business Administration

Date Written: August 16, 2013

Abstract

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

Marinich, Eric, Accounting Information Aggregation and Managerial Cooperation (August 16, 2013). AAA 2014 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2312652 or http://dx.doi.org/10.2139/ssrn.2312652

Eric Marinich (Contact Author)

Miami University of Ohio - Richard T. Farmer School of Business Administration ( email )

Oxford, OH 45056
United States

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