Theresa Libby

Targets are a central component of management control systems and are widely used to direct employee attention and motivate their effort. Accounting research has largely validated the performance-enhancing effects of targets, especially when linked with rewards. However, unique and dynamic institutional features differentiate accounting settings from those examined elsewhere. In this introduction, we introduce the articles appearing in the Journal of Management Accounting Research special forum on target setting in management accounting. We then highlight five promising directions for future accounting research: (1) target pursuit in teams, (2) remote and AI-supported target setting, (3) targets and affect, (4) neurophysiological research on targets as goals, and (5) field experiments on targets. Together, we hope this article can inspire future research aimed at advancing theory and informing practice around targets.

The Routledge Handbook of Behavioural Accounting Research covers a full range of theoretical, methodological, and statistical approaches relied upon by behavioural accounting researchers, giving the reader a good grounding in both theoretical perspectives and practical applications. Behavioural research is broadly defined as research focused at the individual or small group level, drawing mainly on theories from psychology. It is well established in the social sciences and has flourished in the field of accounting in recent decades. This updated edition maintains the structure of the original handbook and includes all the original chapters which have been revised to reflect the current and evolving emphasis on the theories and tools employed in behavioural research and applied to the research in the accounting domain. In addition to the updated original chapters, eight new chapters have been included reflecting the expansion of the topics, theories, and methodologies and presenting developmental advice for behavioural accounting researchers. The new topic and theory chapters include chapters outlining our progress in research on the accounting for sustainability, language effects in financial disclosures, advances in policy-related research in financial accounting, the impact of algorithms and artificial intelligence, and the role of data analytics and data visualization on decision-making in accounting and auditing. Two additional method chapters include a primer on Hayes PROCESS models in mediation and moderation as well as a new chapter outlining best practices in the design and implementation of experiential questionnaires. Finally, a chapter has been added providing guidance and advice on responding to reviewers’ comments to complement the first-edition chapter on preparing a review. This book is a vital introduction for advanced doctoral students in behavioural accounting research as well as a valuable resource for established behavioural accounting researchers, providing a comprehensive guide to the development and implementation of a behavioural accounting research project.

In 1967, Becker presented the notion of “behavioural accounting” as the application of methods and approaches from the behavioural sciences to investigate the interface between accounting and human behaviour (Birnberg & Shields 1989). Today, behavioural accounting research (BAR) can be defined as the systematic observation of people creating, reporting, and/or responding to accounting data. Behavioural accounting researchers evaluate behaviours, judgments, decisions, and cognitive and physiological responses to accounting information and disclosures individually and in the aggregate.

Incentive contracts containing ex ante targets are prevalent in organizations. Although prior research indicates that contract frame has no significant impact on employee performance when an ex ante target is assigned, we provide a more nuanced view by examining the role of narcissism in this relationship. Results indicate when an ex ante target is assigned, less narcissistic employees perform better than more narcissistic employees regardless of contract frame. In addition, target difficulty plays a role. When narcissism is lower, employees working under a less difficult target perform better than those working under a more difficult target, but there is no effect of contract frame. When narcissism is higher, we find an interaction between contract frame and target difficulty. When the target is less difficult, employees higher in narcissism perform better under the penalty than the bonus contract frame, whereas the opposite is the case when the target is more difficult. Data Availability: Data are available from the authors upon request. JEL Classifications: M41.

Students are placed in the role of a new employee in the mergers and acquisitions division of a regional accounting firm performing due diligence on a potential acquisition target for their client. Their task is to determine the fair value of a group of unusual nonfinancial assets, the horses owned by the target company, an equine training business. Students evaluate the horse’s highest and best use, identify market participant assumptions, create valuation models, determine the exit price, and perform a sensitivity analysis. Appendix A describes the equine industry and provides a source for many of the necessary valuation assumptions. This case study is complementary to cases where students calculate fair values in more traditional settings and is designed to push them outside their comfort zone while emphasizing that the same familiar concepts apply. The case is recommended for use in advanced financial accounting courses at the undergraduate or master’s levels. JEL Classifications: M41.

This case introduces students to a chain of home improvement stores with locations across the United States. In the role of a data analyst, students will help the CFO understand the company's non-financial drivers of revenue. Students will create a “dashboard” visual to evaluate the performance of store managers by date, state, and store number. Ten years of created data—including store revenue and four non-financial store-level performance measures—are available in a Microsoft Access database. Students analyze data using Power Pivot and/or Power BI and summarize their findings in a report. We provide evidence of efficacy from an MBA-level management accounting class, although the case has also been used effectively in a junior-level undergraduate management accounting class. It is suitable for use in courses with a management accounting, AIS, or data analytics focus where the students have little or no prior knowledge about Power Pivot and/or Power BI.

Firms often evaluate subordinate performance relative to a difficult but attainable goal set at the beginning of the evaluation period. For many, a mechanism exists by which these goals may be adjusted downward at the end of the period to account for an uncontrollable negative event. We examine, experimentally, how the knowledge that a downward ex post discretionary goal adjustment is possible affects subordinates’ expectancy of reward and performance in periods where a negative uncontrollable event occurs, and whether high identity, defined as high perceived social connectedness between the superior and subordinate, moderates this effect. We find that high superior-subordinate identity can offset the otherwise negative impact of the potential for downward ex post discretionary goal adjustment on subordinates’ expectancy of reward and performance. Thus, creating an organizational culture that promotes identity between superiors and subordinates can complement incentive-based controls in motivating subordinate performance. JEL Classifications: C91; J33; M41; M52. Data Availability: Please contact the authors.

In response to public pressure for accountability in the not-for-profit (NFP) sector, attempts have been made to adopt for-profit controls. These have generated mixed results. While many have argued that employees attracted to the NFP sector are “different,” little prior empirical evidence backs up this claim. To address this gap, we review the literature to identify claimed individual characteristics that might differ and use the survey method to examine whether these differences exist between the groups of responding managers working in the NFP and for-profit sectors. NFP respondents exhibit lower levels of narcissism, lower levels of entitlement, less extroversion, and a more externally oriented locus of control than their for-profit counterparts. In exploratory multivariate analysis, best predictors of NFP membership include extroversion, locus of control, conscientiousness, and moral reasoning. Rather surprisingly, the groups did not differ on altruism or tolerance for ambiguity. Implications for control system design are discussed.