Debiasing as a Powerful Management Accounting Tool? Evidence from German Firms
Forthcoming: Journal of Accounting & Organizational Change
Posted: 30 Jan 2020 Last revised: 5 Oct 2020
Date Written: October 05, 2020
Purpose: We investigate if and how firms approach debiasing and what determines its success. In particular, we examine if debiasing is effective in reducing cognitive decision biases. We also investigate organizational characteristics that determine the effectiveness of debiasing.
Design/methodology/approach: We use survey data from German firms to answer our research questions. Target respondents are individuals in a senior management accounting function.
Findings: In line with our hypotheses, we find that debiasing can reduce cognitive biases. Moreover, we find that psychological safety not only directly influences the occurrence of cognitive biases but is also an important factor that determines the effectiveness of debiasing.
Research limitations/implications: We provide evidence that debiasing can serve as a powerful management accounting tool and discuss debiasing in the context of recent management accounting literature. We also add to the stream of research that investigates the role of psychological safety in organizations by highlighting its importance for successful debiasing.
Practical implications: We inform firms that use or intend to use debiasing about crucial determinants to consider when debating its implementation, i.e., psychological safety. We also identify risk management as a potential interface for the implementation of systematic debiasing.
Originality/value: While previous research primarily addresses specific cognitive biases and debiasing mechanisms utilizing lab experiments, this is—to the best of our knowledge—the first study investigating cognitive biases and debiasing on a broad conceptual level using survey data.
Keywords: Cognitive Biases, Debiasing, Management Accounting, Psychological Safety, Unbiasing
JEL Classification: M41, M14, D91
Suggested Citation: Suggested Citation