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How Effective Are Social Norm Interventions in Corporations? Evidence from a Laboratory Experiment on Earnings Misrepresentation

Year: 2017

Type: preprint

Abstract: Social norms can act as safeguards against corporate misconduct, but can also foster undesirable behavior. We conduct a laboratory experiment where we expose participants (in the role of CEOs) to social norms approving or disapproving of earnings management. There are systematic differences among individuals' reactions to the situational pressure. Specifically, individuals with strong preferences for truthfulness react less to both kinds of social norms. Self-signaling provides a convincing explanation of individual behavior. These findings have implications for the empirical analysis of managerial behavior and for the use of social norms as steering tools for corporate governance.

Source: SSRN Electronic Journal

Authors: Rajna Gibson, Carmen Tanner, Alexander F. Wagner

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W2466591338

Cites: 53

Cited by: 1

Related to: 10