Accounting information disclosure decisions within a social contingency framework

Abstract

Financial accounting disclosure decisions are made in a complex social environment. The Social Contingency Model (SCM) provides a suitable framework within which disclosure decisions can be examined. Consequently, this thesis examined the impact of accountability and participants' commitment to a disclosure policy on their mandatory and voluntary information disclosure decisions and the integrative complexity of thoughts that underlie these decisions. For this purpose, two laboratory experiments were conducted using senior accounting undergraduate students.

Contrary to the predictions of SCM, results of the two experiments indicate that accountability may lead to significantly different decisions only in certain disclosure decision tasks. Therefore, under what conditions and what type of decision tasks accountability may or may not have an impact, remain unclear. An increase in integrative complexity of thought appears to be necessary for participants to justify more information relating to the voluntary disclosures and less information relating to the mandatory disclosures. As the integrative complexity of thought may produce different outcomes with respect to different decision-tasks, when examining the impact of accountability on decisions the integrative complexity of thought needs to be recognised as an intervening variable. Furthermore, the results suggest that participants' commitment to a disclosure policy may have produced a blocking effect. The impact of commitment was positive on the integrative complexity of accountable-participants' thoughts on one disclosure scenario but negative on another. Consistent with the results relating to the impact of accountability on disclosure decisions, the type of task appears to be critical in understanding the impact of commitment on participants' disclosure decisions under accountability demands.

Student decision behaviour under accountability demands appears to be highly complex hence such demands must be used with caution when designing monitoring systems. Many factors, such as the type of decision-task and individuals' commitment to certain valued outcomes, may significantly interact with accountability demands. These combined effects may lead to desirable outcomes only in certain decision tasks. Finally, after much research, what is becoming clear about accountability demands is that the effect of holding people accountable for their decisions is highly complex. Therefore, an excessive reliance on accountability demands as a monitoring mechanism on the one hand and a lack of appreciation of the complex results such demands can produce on the other, may bring about serious unintended behavioural consequences.