TY - JOUR
T1 - It’s not always black and white—identifying characteristics of managers who perceive and use ambiguity in accounting to their advantage
AU - Chambers, Valerie A.
AU - Reckers, Philip
AU - Whitecotton, Stacey M.
N1 - Publisher Copyright:
© 2023, American Accounting Association. All rights reserved.
PY - 2023/3/1
Y1 - 2023/3/1
N2 - Prior research shows that rules ambiguity often leads to self-serving decision making and ethical violations. We extend this research by identifying characteristics of managers that associate with increased perceptions of ambiguity in accounting standards. Specifically, we find higher levels of narcissism (entitled selfinterest), impulsivity (affective reactivity), and construal mindset (abstract thinking) are all significant contributors, individually and in combination. Our integrated, interactive model shows impulsivity interacts with both construal mindset and with narcissism in perceptions of rules ambiguity. Path analysis further documents that perceived ambiguity mediates trait characteristics and self-serving earnings management choices. Our findings contribute to a better understanding of underlying processes driving earnings management and may explain, in part, recent mixed evidence in psychology regarding the effects of higher level construal thinking and the cognitive processes driving the interaction of narcissism and impulsivity in business settings. We also address potential implications in an era of increased principles-based guidance.
AB - Prior research shows that rules ambiguity often leads to self-serving decision making and ethical violations. We extend this research by identifying characteristics of managers that associate with increased perceptions of ambiguity in accounting standards. Specifically, we find higher levels of narcissism (entitled selfinterest), impulsivity (affective reactivity), and construal mindset (abstract thinking) are all significant contributors, individually and in combination. Our integrated, interactive model shows impulsivity interacts with both construal mindset and with narcissism in perceptions of rules ambiguity. Path analysis further documents that perceived ambiguity mediates trait characteristics and self-serving earnings management choices. Our findings contribute to a better understanding of underlying processes driving earnings management and may explain, in part, recent mixed evidence in psychology regarding the effects of higher level construal thinking and the cognitive processes driving the interaction of narcissism and impulsivity in business settings. We also address potential implications in an era of increased principles-based guidance.
KW - Accounting standards
KW - Construals
KW - Impulsivity
KW - Narcissism
KW - Rules ambiguity
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U2 - 10.2308/BRIA-2021-031
DO - 10.2308/BRIA-2021-031
M3 - Article
AN - SCOPUS:85160028080
SN - 1050-4753
VL - 35
SP - 45
EP - 65
JO - Behavioral Research in Accounting
JF - Behavioral Research in Accounting
IS - 1
ER -