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

See all articles by Niklas Kreilkamp

Niklas Kreilkamp

University of Giessen

Maximilian Schmidt

University of Giessen

Arnt Wöhrmann

University of Giessen

Date Written: October 05, 2020

Abstract

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

Kreilkamp, Niklas and Schmidt, Maximilian and Wöhrmann, Arnt, Debiasing as a Powerful Management Accounting Tool? Evidence from German Firms (October 05, 2020). Forthcoming: Journal of Accounting & Organizational Change, Available at SSRN: https://ssrn.com/abstract=3515833 or http://dx.doi.org/10.2139/ssrn.3515833

Niklas Kreilkamp

University of Giessen ( email )

Managerial Accounting
Licher Str. 62
Giessen, 35394
Germany

Maximilian Schmidt (Contact Author)

University of Giessen ( email )

Managerial Accounting
Licher Str. 62
Gießen, 35394
Germany

Arnt Wöhrmann

University of Giessen ( email )

Managerial Accounting
Licher Str. 62
35394, 35394
Germany

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