Increasing Confirmation Response Rates: Prenotifications, Monetary Incentives and Addressee Differences

Abstract

This article reports the results of a research effort that measured the response enhancing effectiveness of two sizes of small monetary incentives and prenotification letters. The measurements were obtained during the audit of the installment and commercial loan balances of a medium-sized bank located in Central Florida. The data were analyzed with logistic regression. The analyses revealed that prenotification letters tended to encourage timely responses but they did not increase overall response levels. This was true for both types of loan balances. Small monetary incentives were found to be effective with installment loans in certain situations but ineffective with commercial loans.

Retraction: The Effects of Small Monetary Incentives on Response Quality and Rates in the Positive Confirmation of Account Receivable Balances

“…The results support prior accounting research (e.g., Engle 1991) in finding that the use of small monetary incentives significantly increased confirmation response rates, and that the use of a quarter was as equally effective as a dollar. Additionally, this investigation demonstrated that small monetary incentives could effectively improve response rates with a recipient population consisting of a cross-section of commercial businesses, governmental organizations, and not-for-profit entities.…”

“…The lack of a sizable number of negative comments is consistent with Engle (1991) and argues against any beliefs that auditors should not use incentives because they will insult the confirmation recipients and be viewed as unprofessional.…”

“…Recent findings suggest that small monetary incentives significantly increase confirmation response rates. For example, Engle (1991) investigated the response-enhancing effectiveness of two monetary incentive levels (quarter and dollar) and prenotification letters when positive confirmation requests were sent to installment and commercial loan customers of a medium-size bank. His analysis revealed that the small monetary incentives proved effective with installment loans when incentives were used without a prenotification letter.…”

“…While prior auditing research has produced evidence suggesting that confirmation Terry J. Engle is a Professor and James E. Hunton is an Associate Professor, both at the University of South Florida. response rates can be improved with small monetary incentives (e.g., Engle 1991), research in nonaccounting disciplines reports disturbing information suggesting that the quality of survey-based responses can deteriorate when small monetary incentives are used (e.g., Hansen 1980;Schneider andJohnson 1994, 1995). A limited number of studies have focused on response quality in an auditing confirmation context (e.g., Armitage 1990;Caster 1990), but none of these investigations examined the potential effects of small monetary incentives on quality.…”