Sophie Maussen and Sophie Hoozée are very excited to share their newest publication in Accounting, Organizations and Society! Together with their coauthor Eddy Cardinaels, they experimentally study how costing system design choices impact managerial misreporting in a multi-agent budgeting setting.
In particular, when superiors receive an aggregate signal of unused capacity and subordinates have no discretion over cost allocation input parameters, misreporting of cost budgets decreases compared to when capacity reporting is absent. However, the benefits of capacity reporting on misreporting largely vanish when subordinates have discretion over the inputs allowing them to hide their unused capacity. Results are driven by the anticipation of both peer reporting behavior and superior rejection behavior. Our results have important implications for practice and imply that costing system designers should be aware that giving employees discretion over time inputs can offset the decision-making benefits of TDABC.
This publication is based on the third chapter of Sophie Maussen’s doctoral dissertation.
Read the full article here: Costing system design and honesty in managerial reporting: An experimental examination of multi-agent budget and capacity reporting
Full reference: Maussen, S., Cardinaels, E., & Hoozée, S. 2024. Costing system design and honesty in managerial reporting: An experimental examination of multi-agent budget and capacity reporting. Accounting, Organizations and Society 112: 101541.