Subcertification and Relationship Quality: Effects on Subordinate Effort


Speaker


Abstract

This study considers the decision to impose a control system and the resulting impact on the effort exerted by the controlled individual. I experimentally examine the interaction of the imposed control system with existing manager-subordinate relationship quality. I draw upon the leader-member exchange (LMX) literature to define and measure relationship quality, providing evidence consistent with subordinates in high quality relationships exerting greater effort to report an accurate accounting estimate than those in low quality relationships. I next consider the effects of the decision to require subcertification on effort, finding that subordinate response to the control depends upon the existing relationship quality; high quality relationship subordinates decrease effort while low-quality relationship subordinates increase effort. The findings I present are of particular importance to managerial accountants who are charged with control system design and implementation decisions. To the extent that greater effort yields higher quality estimates, this study has financial statement quality implications as well.

 
Download paper
 
Contact information:
Paolo Perego
Email