The Accountability Demand for Information in China and the US - A Research Note

Abstract

This study replicated Evans, Heiman-Hoffman and Rau's (1994) [hereafter, EHR] US study, using Chinese MBA students as participants. The Chinese students acted as owners and selected one of two control systems. One control system requires truthful reporting and the other control system permits the manager to falsify the report. The two systems have the same expected payoff to the owner if the owner believes that the manager will always lie when given the opportunity. If the owner believes that there is any probability that the manager will tell the truth, then the more lenient system has the higher expected payoff. We compared the US versus Chinese control system choices, and examined whether the Chinese owner-participants would be willing to sacrifice wealth to get accountability. The results indicate that a significant proportion of Chinese participants do have an accountability demand for information, and that this proportion is at least as high as that of the US participants in EHR.

JEL Classification: M40, M41, M46, M47, G34