Accounting and Finance

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Browsing Accounting and Finance by Author "Fiolleau, Krista"

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    Calibration Committees and Rating Distribution Guidance Effects on Leniency Bias in Subjective Performance Evaluations
    (University of Waterloo, 2023-04-19) Patterson, Katharine; Fiolleau, Krista
    Firms use both calibration committees and rating distribution guidance to reduce leniency bias in subjective performance ratings. Leniency bias is the tendency to provide subordinates with higher ratings than deserved which can weaken the link between incentives and effort, leading to suboptimal and subordinate performance. I employ a 2x2 online experiment to assess how the presence versus absence of peer calibration committees [PCCs] and rating distribution guidance [RDG] affects leniency bias present in supervisors’ ratings of subordinates’ performance. I find support that supervisors may display more leniency in ratings prepared in anticipation of a PCC, especially among low performers. As the increased bias appears to impact low-performers, this may create additional fairness concerns for moderate and high-performers, which could demotivate these subordinates. Next, I find support that rating distribution guidance does have a main effect of reducing the leniency bias displayed among low and high performers. Further, using planned contrast testing, I find support for my predicted pattern of results for low performers. That is, the presence of a PCC has a main effect of increasing leniency bias, the presence of RDG has the main effect of reducing leniency bias, and the interactive effect such that when a PCC is present, the presence of RDG weakens the effect of PCCs on leniency bias. This finding indicates that rating distribution guidance may be helpful in settings with a PCC.
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    The Effects of Narcissism and Perspective-taking on Managers’ Escalation of Commitment
    (University of Waterloo, 2020-02-19) Stapleton, Andrea; Libby, Theresa; Fiolleau, Krista
    Companies often have the opportunity to invest in capital assets. Unfortunately, the benefits of such investments are not always realized and managers are challenged with deciding whether they should withdraw their support for a failing endeavour. Termed “escalation of commitment”, this phenomenon describes situations in which managers continue to fund a failing course of action despite having an opportunity to withdraw (Staw 1976). While management accounting research has largely focused on designing controls to influence the behavior of employees, more recently, researchers have begun exploring how managers’ personalities impacts their decision-making and their response to management control systems (for a brief review, see Young et al. 2016). In this dissertation, I examine the effect of an individual difference, specifically narcissism, on managers’ escalation of commitment. I also investigate the effect of prompting individuals to consider the perspective of an outside manager to reduce individuals’ support for an underperforming project and whether this prompt interacts with managers’ narcissism. Based on prior research, I predict that narcissistic managers are less likely to reinvest in an underperforming project when they can withdraw and invest in an alternative project that offers the potential for higher returns. I also predict that managers who view negative investment feedback from the perspective of an outside manager will be less likely to reinvest. Based on my expectation that narcissistic managers exhibit reduced escalation tendencies, I predict that perspective-taking will be less effective in mitigating their commitment to an underperforming project relative to managers with low narcissism. Results of an experiment completed by 228 managers do not provide support for an effect of either narcissism or perspective-taking on managers’ support for an underperforming project. Interestingly, results indicate that perspective-taking increases the escalation tendencies of narcissistic managers while having no statistically significant effect on less narcissistic managers. Given these results, I propose a theory-based explanation for narcissistic managers’ response and suggest future research opportunities. Overall, this dissertation contributes to the growing literature examining how manager’s narcissism influences decision-making in organizations and is a first step in understanding how individual differences may influence the success of management control systems.