Behavioral Accounting & Financial and Nonfinancial Disclosure
This doctoral thesis includes four research papers in the field of behavioral accounting that analyze management accounting, corporate governance and compliance issues (Chapter A) and seven research papers in the area of financial and nonfinancial disclosure (Chapter B). In Chapter A, research papers A1 and A3 examine how different control ... instruments and influencing factors in the work environment affect the extent to which an employee behaves (non)compliant, which is a central issue in research and practice. In detail, paper A1 asks whether the presence and structure of corporate giving constrain employees’ excessive risk taking that was, for example, often cited as a root cause of the past global financial crisis. Contrary to widespread practice, our experimental evidence suggests that firms could constrain employees’ excessive risk taking by linking existing contributions to project rather than corporate performance. Yet, too much personal involvement in a firm’s prosocial initiatives causes excessive risk taking to rise again so that our paper highlights an inverted U-shape curve of effectiveness of getting employees involved. Paper A3 investigates whether control result transparency and detrimental effects on others can influence employees’ noncompliance, particularly misreporting, and shows that both factors work as substitutes, not as complements. Removing employees’ anonymity by notifying peers about the control result in a control procedure alleviates misreporting as long as there are no detrimental effects on others. However, once other individuals can suffer economic harm, control result transparency does not significantly reduce misreporting any further. Paper A3 thus covers a multi-hierarchical perspective and demonstrates that injunctive norms activated by the firm’s management decision to make control results transparent and injunctive norms activated by social preferences for peers’ welfare interact, and differentially influence misreporting. Both instruments are effective at crowding-in ethical considerations which were suppressed by the control procedure in an audit environment. With a view to the quest for transparency in the management of firms, paper A2 analyzes the informal control instrument of mutual monitoring, i.e., the observability of employees’ inputs (i.e., efforts, actions and work routines) and output (i.e., performance), in a multi-task environment. Consequently, mutual monitoring enables peer control by accessing richer, more accurate, more extensive, more disaggregated, and more real-time information on employees’ effort allocation between easier and more difficult tasks. The paper shows that mutual monitoring of inputs and outputs incites impression management and facades of proficiency prompting employees to prioritize easy tasks over difficult ones. Since observability also provides the basis for many widely accepted practices in total quality management implementations, the research also highlights the effect of the firm’s error culture. The research results indicate a moderation such that an open (versus a blame) error culture only without mutual monitoring significantly lowers easy task prioritization suggesting that privacy is important in supporting self-focused experimentation and distraction avoidance. These results should inspire managers to critically reflect on modern facilities that often provide nearperfect observability of the actions and performance of every employee by leveraging technological advancements (e.g., communication of real-time information) and open-workspace design. Additional to these papers, paper A4 also focuses on lower hierarchies, but refers to another employee behavior and examines the effect of donation rankings on employee performance. The study identifies an important motivational spillover effect: prosocial incentives can spill over to employees' motivation to increase performance. While it is not surprising that being ranked on the task at hand matters to how employees perform this task, it is surprising that systems on unrelated, prosocial activities like workplace giving also matter. Chapter B refers to research papers that rather focus on financial and nonfinancial disclosure topics at the management level or company level and therefore deal with questions on a company’s investor relations system. Against this background, paper B1 asks whether corporate social responsibility (CSR) reporting is an appropriate means of attracting young talents. In order to answer this research question empirically, the annual and nonfinancial reports of publicly listed German firms are processed and analyzed using computer-linguistic methods. While more pronounced CSR disclosures on the aggregate benefit a firm in increasing its attractiveness as a potential employer, the study also reveals that a strategic fit between financial and nonfinancial information may be important to credibly communicate the firm’s CSR endeavors and thereby to attract young talents. Paper B2 investigates the relation between different institutional and demographic characteristics and a firm’s Internet-based disclosure practices using a two-period panel approach. The focus is first and foremost on the novel technological features of investor communication enabling the investor to self-select targetspecific information and present information content in a user-friendly, timely and transparent way. More sophisticated and innovative investor communication practices tend to be associated with the presence of a Chief Information or Chief Sustainability Officer, lower management board turnover and an older (a younger) management board (Chief Executive Officer). Moreover, a Chief Digitalization Officer and a Digitalization committee tend to facilitate domain-specific innovative investor communication, e.g., concerning mobile applications or state-of-the-art share price information features on the firms’ investor relations website. Paper B3 examines the monetary valuation of environmental externalities on corporate level both normatively and empirically and proposes a valuation framework. While there are clear opportunities (e.g., the facilitation of comparisons between various impacts, the facilitation of communicating environmental externalities and the estimation of costs connected to potential internalizations), there are also central problems: possible ideological concerns of stakeholders as well as the subjectivity and uncertainty of the results. Overall, the controversial position of monetizing environmental externalities seems warranted. Paper B4 critically evaluates the recognition, measurement and disclosure requirements under IFRS 17. In particular, it discusses the new valuation model, the so-called building block approach which entails massive changes for the insurance industry. Paper B5 asks whether the women's quota creates transparency for investors by particularly considering the supervisory board committee level. Since the empirical findings reveal that firms provide very inhomogeneous and sometimes nontransparent and incomplete accounts of their objectives and the status quo of greater participation of women, the paper develops a "quota mirror". While paper B5 expressly addresses gender diversity, paper B6 likewise refers to a nonfinancial issue, but concentrates on sustainability reporting according to the standards of the Global Reporting Initiative and the Sustainability Accounting Standards Board covering the triple-bottom-line (economy, environment, society). Finally, paper B7 touches on both financial and nonfinancial issues by analyzing the remuneration transparency report according to §§ 21, 22 EntgTanspG. (Non-) collectively bargained firms can leverage the drafted template best practice as a guide for their next reporting season in 2021, or 2023 respectively, and remedy the disclosure deficiencies that have been apparent to date with regard to their measures to promote equality and achieve equal pay.