Woodhouse, Kerrie Accounting choice in the presence of conflicting incentives This study explores the still largely unexamined impact of multiple and conflicting incentives on a manager’s accounting choice as identified by Fields, Lys and Vincent (2001). Using a 2x2, between subjects, factorial design, two experiments were conducted using a sample of 116 Chief Financial Officers (hereinafter, CFOs) from a population of the top 700 companies listed on the Australian Stock Exchange. The study examines and tests hypotheses relating to incentives from each of the three classifications used by Fields et al. (2001): asset pricing, explicit contracting, and implicit contracting (the incentive to influence third parties such as customers, suppliers and employees). Insights were drawn from the disciplines of psychology and management to begin to form an understanding of this complex trade-off decision, and to assist in the development of hypotheses regarding this trade-off. Contrary to expectations based on the volume of financial accounting evidence on the importance of the asset pricing incentive, managers chose to avoid a debt covenant violation rather than meet their asset pricing benchmark when these incentives were in direct conflict. Given a conflict between a performance pricing clause and an implicit contracting incentive to protect their firm’s competitive position in imminent price negotiations, managers again prioritised the explicit contracting incentive. The study also contributes important survey evidence on the attitudes and perceptions of Australian CFOs regarding performance measures reported to stakeholders and the importance of meeting their expectations. This survey partially replicates that of Graham, Harvey and Rajgopal (2005)and as a consequence, offers an interesting comparison of the opinions of CFOs in Australia and the USA. Consistent with the counsel of Chan, Faff and Ramsay (2005), the survey results indicate that it may well be “imprudent to blindly extrapolate US findings to small market settings”. Conditional analysis of the survey responses finds that the characteristics that differentiate the Australian market from the US market (for example firm size and materials industry membership) are associated with differences in opinion between the CFOs in each setting. This study contributes primary evidence on the unexamined area of accounting choice under conflict. Such evidence is novel in that it is achieved with a lesser utilized methodology in response to the observation in Fields, et al. (2001) that research in accounting choice has exhausted certain techniques and would benefit from a fresh approach. Importantly, the theory developed in this thesis draws together insights from multiple disciplines to begin to develop a unified framework for the understanding and evaluation of choices made to satisfy multiple stakeholders. Further, the study contributes valuable insights on the attitudes of Australian CFOs towards performance measures and benchmarks and how these attitudes differ from those in the USA. ethesis-20120516-114514;Stakeholder salience theory;Choice under conflict;thesis(doctorate);Australian financial reporting environment;1959.1/561166;Performance pricing;Asset pricing incentives;Open access;Interdisciplinary research;Australian Chief Financial Officers;Implicit contracting;monash:83975;Debt covenants;2012 2017-02-17
    https://bridges.monash.edu/articles/thesis/Accounting_choice_in_the_presence_of_conflicting_incentives/4664038
10.4225/03/58a6508677842