Cognitive Determinants of Aggressive Financial Reporting – The Combined Effects of Ego Depletion, Moral Identity, and an Ethical Intervention

46 Pages Posted: 3 Feb 2021

See all articles by John Lauck

John Lauck

Louisiana Tech University - School of Accounting & Information Systems

Eric Michael Negangard

University of Virginia; University of Virginia

Joseph Rakestraw

Florida Atlantic University - School of Accounting

Date Written: January 8, 2021

Abstract

We experimentally investigate the combined effects of ego depletion, moral identity, and ethical interventions on managers’ financial reporting aggressiveness in the development of an accounting estimate. We find that decision makers with high moral identity become more aggressive later in the day (once they become ego depleted), but those with low moral identity do not. We also find that an ethical intervention has a significant influence on the reporting judgments of depleted decision makers with low moral identity, but not on the judgments of depleted decision makers with high moral identity. However, the opposite effect occurs when decision makers are not depleted. That is, an ethical intervention has a significant influence on the financial reporting judgments of undepleted decision makers with high moral identity, but not on the judgments of undepleted decision makers with low moral identity. Supplemental analyses reveal different patterns of decision makers’ cognitive dissonance across experimental conditions.

Keywords: Aggressive Financial Reporting, Ego Depletion, Moral Identity, Ethics

JEL Classification: M1, M14, M4, M41

Suggested Citation

Lauck, John and Negangard, Eric Michael and Negangard, Eric Michael and Rakestraw, Joseph, Cognitive Determinants of Aggressive Financial Reporting – The Combined Effects of Ego Depletion, Moral Identity, and an Ethical Intervention (January 8, 2021). Available at SSRN: https://ssrn.com/abstract=3762591 or http://dx.doi.org/10.2139/ssrn.3762591

John Lauck (Contact Author)

Louisiana Tech University - School of Accounting & Information Systems ( email )

P. O. Box 10318
Ruston, LA 71272
United States

Eric Michael Negangard

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States
4349247002 (Phone)
4349247002 (Fax)

HOME PAGE: http://www.commerce.virginia.edu/faculty/Pages/FacultyMembers.aspx?FacultyId=102

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States
4349247002 (Phone)
4349247002 (Fax)

HOME PAGE: http://www.commerce.virginia.edu/faculty/Pages/FacultyMembers.aspx?FacultyId=102

Joseph Rakestraw

Florida Atlantic University - School of Accounting ( email )

777 Glades Blvd
Kaye Hall (KH-25) Suite 119
Boca Raton, FL 33431
United States
561-297-3008 (Phone)

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

Paper statistics

Downloads
76
Abstract Views
569
rank
427,552
PlumX Metrics