The Outcome Effect - A Review and Implications for Future Research

Journal of Accounting Literature, Vol. 31(1):2-30

Posted: 22 Feb 2016

See all articles by Lasse Mertins

Lasse Mertins

Johns Hopkins University - Carey Business School

Debra Salbador

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems

James H. Long

Auburn University - Raymond J. Harbert College of Business - School of Accountancy

Date Written: 2013

Abstract

This paper synthesizes the extant research on the outcome effect in the accounting domain, focusing primarily on the context of performance evaluation. It reviews the current state of our knowledge about this phenomenon, including its underlying cognitive and motivational causes, the contexts in which the outcome effect is observed, the factors that influence its various manifestations, and ways in which undesirable outcome effects can be mitigated. It also considers various perspectives about the extent to which outcome effects represent undesirable judgmental bias, and whether this distinction is necessary to motivate research on this topic. The paper is intended to motivate and facilitate future research into the effects of outcome knowledge on judgment in the accounting context. Therefore, we also identify important unanswered questions and discuss opportunities for future research throughout the paper. These include additional consideration of instances in which the outcome effect is reflective of bias, how this bias can be effectively mitigated, ways in which outcome information influences judgment (regardless of whether this influence is considered normative), and how the underlying causes of the outcome effect operate singly and jointly to bring about the outcome effect. We also consider ways that future research can contribute to practice by determining how to encourage evaluators to retain and incorporate the relevant information conveyed by outcomes, while avoiding the inappropriate use of outcome information, and by enhancing external validity to increase the generalizability of experimental results to scenarios frequently encountered in practice.

Keywords: Outcome effect, Evaluation, Managerial performance evaluation, Audit litigation

Suggested Citation

Mertins, Lasse and Salbador, Debra and Long, James H., The Outcome Effect - A Review and Implications for Future Research (2013). Journal of Accounting Literature, Vol. 31(1):2-30 , Available at SSRN: https://ssrn.com/abstract=2735502

Lasse Mertins (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Debra Salbador

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems ( email )

Pamplin College of Business
Blacksburg, VA 24061
United States

James H. Long

Auburn University - Raymond J. Harbert College of Business - School of Accountancy ( email )

301 Lowder Hall
405 West Magnolia Avenue
Auburn University, AL 36849
United States
(334) 844-6214 (Phone)
(334) 844-5875 (Fax)

HOME PAGE: http://jameshlong.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,091
PlumX Metrics