Can Social Norm Activation Improve Audit Quality? Evidence from an Experimental Audit Market

Blay, Allen D.; Gooden, Eric S.; Mellon, Mark J.; Stevens, Douglas E.

doi:10.1007/s10551-017-3561-z

Cited by 43 publications

(27 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Social norms have long been of interest to social scientists and economists (Cahan, Chen, & Chen, 2017; Coleman, 1986, 1990; Elster, 1989; Hong & Kacperczyk, 2009; Horne, 2009; Krupka & Weber, 2013; Lindenberg, 2008; Opp,1982; Rost & Weibel, 2013) and are suggested to act as default rules in social dilemmas (Biel & Thøgersen, 2007). An increasing number of researchers apply this concept to explain social responsibility (Blay et al, 2019; Cahan et al, 2017; Shen & Benson, 2016), honesty (Blay et al, 2019), gambling (Callen & Fang, 2020), diversity (Chang, Milkman, Chugh, & Akinola, 2019), cooperation (Fehr & Fischbacher, 2004a; Pillutla & Chen, 1999), and fairness (Fehr & Fischbacher, 2004b; Rabin, 1993; Rost & Weibel, 2013). Among social norms, fairness norms are suggested to be especially important (Binmore, 1998; Brosnan & de Waal, 2014; Opp, 1982).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…They cannot reveal the mechanisms of how social norms influence corporate governance decisions at the individual level, which can be addressed in experimental studies that have the advantage of close observations of interactive human behaviors. In a review of social norms theory in experimental accounting research, Blay et al (2018, p. 192) suggest that “the best way to advance (social norms) theory is often by using experimental methods with strong manipulations and controls.” Therefore, some studies investigate the roles of social norms by using the experimental method and suggest that social norms for responsibility and honesty could affect audit quality (Blay et al, 2019). Social norms for gender diversity also influence decisions about adding members to corporate boards (Chang et al, 2019).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…Although using students as participants often draws concerns about the external validity of experimental results (Falk & Heckman, 2009; Henrich, Heine, & Norenzayan, 2010; Levitt & List, 2007), student participants have been widely used in experimental studies of board decision‐making (Gillette et al, 2003, 2008; González et al, 2006) and accounting (Blay et al, 2019; King, 2002). Meanwhile, it has been suggested that there are advantages of using student participants (Gächter, 2010; King, 2002).…”

Section: Experimental Design and Proceduresmentioning

confidence: 99%

“…The latter are often referred to as social norms (Bendor & Swistak, 2001; Jan Piskorski & Gorbatâi, 2017). Social norms can be seen everywhere in human societies, ranging from norms for fairness, honesty, responsibility, and cooperation to the use of money and food sharing (Blay, Gooden, Mellon, & Stevens, 2018, 2019; Elster, 1989; Fehr & Fischbacher, 2004a, 2004b). In particular, fairness norms prescribe that the “cake” of money units ought to be distributed equally (equality principle), or equitably (desert principle), among players (Corgnet, Sutan, & Veszteg, 2011; Konow, 2003; Rost & Weibel, 2013).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Social norms for fairness and board voting behavior: An experimental investigation

Yin

Chen

et al. 2021

Corporate Governance

View full text Add to dashboard Cite

Research Question/Issue Social norms theory suggests that people voluntarily defend social norms even when their economic interests are not directly affected by norm violations. On the basis of this theory, we posit that when managers seek personal gains at the expense of shareholders, independent directors may be motivated by social norms for fairness to prevent unfair outcomes. We conducted an experiment to investigate the roles of social norms for fairness in a board wherein insiders and uninformed independent directors simultaneously voted in favor of or against a project with either good or bad quality. Research Findings/Insights Independent directors who valued higher levels of fairness norms were less likely to vote in favor of the project. This negative relationship was higher when insiders had poor reputations. However, insiders were inclined to vote in favor of the project, regardless of project quality. Furthermore, fairness norms had a double‐edged effect on board performance, which was dependent on project quality. Theoretical/Academic Implications We adapt social norms theory to the board voting scene with features of group decision‐making and information asymmetry. We find that fairness norms may motivate independent directors to vote against the project. However, the norm heterogeneity of independent directors greatly reduces their bargaining power with insiders, which suggests that monitoring independent directors who are driven by fairness norms has little effect on the voting behavior of insiders. Practitioner/Policy Implications For regulators and firms, we suggest that fairness norms should be treated as a two‐edged sword. The brightness (or darkness) of social norms depends on the trade‐off between gained fairness and loss of board performance. Governance mechanisms that can reduce information asymmetry and norm heterogeneity of independent directors may help maintain fairness in the board while reducing its negative effect on board performance.

show abstract

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Experimental Design and Proceduresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Social norms for fairness and board voting behavior: An experimental investigation

Yin

Chen

et al. 2021

Corporate Governance

View full text Add to dashboard Cite

show abstract

“…Alguns exemplos de normas sociais são: i) normas de consumo, tais como, normas de etiqueta, modos de vestir e normas de gorjetas; ii) normas de reciprocidade, por exemplo, dar presentes; iii) normas de cooperação, tal como, votar ou pagar impostos; e iv) normas de distribuição, bem como normas de justiça e igualdade (FESTRÉ, 2010). A partir das normas sociais de honestidade e responsabilidade, Blay et al (2019) investigaram se a qualidade da auditoria é aprimorada na medida em que essas normas são ativadas no auditor, tendo sido identificado que essas normas sociais estão associadas ao julgamento moral de que a declaração incorreta do auditor é antiética.…”

Section: Introductionunclassified

Corrupção e religiosidade: uma análise cross-country mediada pela qualidade da contabilidade

Santos¹

View full text Add to dashboard Cite

Corruption, in general, involves monetary pay, therefore it requires accounting manipulation to conceal the transactions. It is possible the management's decision to allow these manipulations is influenced by religiousness. This research, based on the Social Norms Theory, considers religiousness a factor capable of influencing the management's decisions regarding quality of the accounting and the corruption. This study had the goal of identifying the association between religiousness and corruption, mediated by the quality of the accounting. The sample for this research includes 36 countries, and the processing of the data collected from 2010 to 2014 was done using Partial Least Squares Path Modeling. The study's results show that more intense religiousness is associated with lower-quality accounting, and together they are associated with more corruption. It is likely that collectivism, a common feature of highly religious environments, favors the development of collusions, which may harm the quality of the accounting and facilitate the emergence of corruption. Besides, more religious environments are associated with less surveillance, which encourages the manipulation of accounting information and corruption. The results contribute to the literature by demonstrating that the combined effect of religiousness and quality of accounting in combating corruption was not efficient. The evidences from this study also allows us to assess the influence of religiousness in the management's decisions, acting like a social norm, with repercussions in the quality of accounting and corruption.

show abstract

Religious social norms and corporate sustainability: The effect of religiosity on environmental, social, and governance disclosure

Terzani

Turzo

2020

Corp Soc Responsibility Env

View full text Add to dashboard Cite

This study examines the relationship between religious social norms and corporate sustainability by analyzing the effect of religiosity and religious affiliation on environmental, social, and governance (ESG) disclosure. To this aim an empirical analysis was conducted on a sample of 17,432 firm‐year observations across 33 countries between 2004 and 2017. A principal component analysis (PCA) was performed in order to estimate a country‐level measure of religiosity, which included the variables “religious person,” “importance of religion,” and “religious service attendance.” The results, obtained by means of a country‐weighted random‐effect Tobit regression model, showed a non‐linear, U‐shaped relationship between religiosity and ESG disclosure, and a significantly moderating effect of religious affiliation. Consistent with the “social norm” theory, this study contributes to previous literature on ESG determinants by showing that religiosity and religious affiliation significantly influence companies' attitude toward non‐financial disclosure.

show abstract

Can Social Norm Activation Improve Audit Quality? Evidence from an Experimental Audit Market

Cited by 43 publications

References 14 publications

Social norms for fairness and board voting behavior: An experimental investigation

Social norms for fairness and board voting behavior: An experimental investigation

Corrupção e religiosidade: uma análise cross-country mediada pela qualidade da contabilidade

Religious social norms and corporate sustainability: The effect of religiosity on environmental, social, and governance disclosure

Contact Info

Product

Resources

About