Why are People Honest? Internal and External Motivations to Report Honestly

Posted: 9 Jul 2019

See all articles by Pamela R. Murphy

Pamela R. Murphy

Queen's University - Smith School of Business; Queen's University

Michael J. Wynes

Wilfrid Laurier University

Till-Arne Hahn

Queen's University

Patricia Devine

University of Wisconsin - Madison

Multiple version iconThere are 2 versions of this paper

Date Written: May 14, 2019

Abstract

We create and validate measures capturing internal and external motivations to report honestly as trait-like characteristics. Both measures have high levels of reliability, as well as convergent and divergent validity. To test their predictive validity, we conduct two experiments. In the first experiment, MTurk participants have the opportunity and incentive to misreport with no immediate consequences, and in the second experiment, participants with management experience report how they would make a hypothetical accounting allocation decision. In both experiments, we find that participants who are higher in internal motivations to report honestly are more likely to report honestly than those lower in internal motivations, confirming this measure’s predictive validity. Both experiments also provide limited support for the predictive validity of our external measure, finding that those who are higher in external motivation do not report differently than those who are lower in external motivations in the absence of controls. Our study also reveals that individuals who are higher in internal motivations have a diminished reaction to different management controls; MTurk participants to a control that punishes misreporting and manager participants to a control that rewards honest reporting. Results suggest that management and those charged with governance should consider that some employees can react negatively to controls that are perceived as constraining. Our measures are useful to researchers who investigate honest reporting by allowing them to identify, ex ante, individuals who want to be honest versus wanting to appear honest.

Keywords: Honesty, Misreporting, Scale development, Experiment, Motivations to report honestly, Self-determination theory, Management controls

Suggested Citation

Murphy, Pamela R. and Wynes, Michael J. and Hahn, Till-Arne and Devine, Patricia, Why are People Honest? Internal and External Motivations to Report Honestly (May 14, 2019). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3415636

Pamela R. Murphy (Contact Author)

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada
6135333260 (Phone)

Michael J. Wynes

Wilfrid Laurier University ( email )

75 University Ave W
waterloo, ontario N2L 3C5
Canada

Till-Arne Hahn

Queen's University

Kingston, Ontario K7L 3N6
Canada

Patricia Devine

University of Wisconsin - Madison

716 Langdon Street
Madison, WI 53706-1481
United States

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