Evaluating capital‐investment decisions is an important function of managerial accountants. There is anecdotal evidence, however, that managers avoid making decisions or delay decisions, which is costly in terms of time, effort, and lost opportunities. Prior research has shown that choice avoidance among nonprofessionals making personal decisions is associated with having to choose between alternatives with very different features or that require trade‐offs of very important goals (choice difficulty). It is unclear, however, whether experienced managers, using the analytical decision tools at their disposal, respond in the same way as nonprofessionals when making accounting decisions. Hence, this study examines whether increased choice difficulty increases negative affect in the capital‐investment decision‐making process and, as a result, the tendency of managers to avoid choice even when analytical decision tools are used. In an experiment with 120 executives, participants facing more difficult decisions reported they felt more worried, nervous, uneasy, and anxious and had a greater desire to postpone making the decision than participants in a control group. Participants provided with a decision aid designed to help them focus their cognitive effort reported a lower desire to postpone making the decision than participants in the choice‐difficulty conditions without the decision aid. I conclude by discussing the result's implications for managers and accountants.

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We examine the extent to which the behavioral agency model reflects the relation between greater risk-bearing in stock option compensation and managerial risk-taking. The behavioral agency model predicts that managers with greater wealth at stake will avoid risky projects that threaten their wealth. This greater risk-bearing effect moderates the problem-framing effect, which predicts that loss-averse managers will be more (less) risk-taking when choosing among loss (gain) projects. Using a 2 × 2 between-subjects experiment with 108 M.B.A. students acting as managers, we find that managers are more risk-taking in the loss context than in the gain context when they have at-the-money stock options but not when they have wealth at stake through in-the-money stock options. Further, we find that managers with in-the-money stock options are less risk-taking than managers with at-the-money stock options in the loss context. These findings support the behavioral agency model prediction that greater risk-bearing in stock option compensation (moving from at-the-money stock options to in-the-money stock options) reduces the problem framing effect on risk-taking behavior, particularly when the firm faces a loss decision context. Our results point to the importance of considering the implications of risk-bearing in stock option compensation for managers choosing risky projects that affect firm value.

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