Does Managerial Reporting Still Matter? An Experimental Investigation of Laboratory Hierarchies

Farah Arshad, Bart Dierynck, Victor van Pelt

Research output: Working paperOther research output

Abstract

In this study, we examine whether and how managerial reporting impacts collaboration in multi-tier organizations by affecting the reputation of managers. We develop theory predicting that when managers report to all other parties in their organization, they improve their reputation by eliminating their informational advantage and by signaling their intention to collaborate on an organizational level. In response, all parties affiliated to the organization collaborate more strongly with each other. The results of our laboratory study support our predictions by showing that total welfare is highest and that welfare inequity is lowest in organizations with managers who report to all other parties in their organization. However, we also find that managers vary considerably in their reporting choices and that managers with higher levels of grit possess more determination and perseverance to report to all other parties in their organization. Our study presents important implications for accounting research and practice by explaining how and why different types of managers use reporting differently in larger and more hierarchical organizations.
Original languageEnglish
Place of PublicationTilburg
PublisherSSRN
Number of pages38
Publication statusIn preparation - Dec 2018

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Managers
Accounting practices
Inequity
Prediction
Hierarchical organization
Organizational level
Accounting research

Cite this

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Does Managerial Reporting Still Matter? An Experimental Investigation of Laboratory Hierarchies. / Arshad, Farah; Dierynck, Bart; van Pelt, Victor.

Tilburg : SSRN, 2018.

Research output: Working paperOther research output

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AB - In this study, we examine whether and how managerial reporting impacts collaboration in multi-tier organizations by affecting the reputation of managers. We develop theory predicting that when managers report to all other parties in their organization, they improve their reputation by eliminating their informational advantage and by signaling their intention to collaborate on an organizational level. In response, all parties affiliated to the organization collaborate more strongly with each other. The results of our laboratory study support our predictions by showing that total welfare is highest and that welfare inequity is lowest in organizations with managers who report to all other parties in their organization. However, we also find that managers vary considerably in their reporting choices and that managers with higher levels of grit possess more determination and perseverance to report to all other parties in their organization. Our study presents important implications for accounting research and practice by explaining how and why different types of managers use reporting differently in larger and more hierarchical organizations.

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