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The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors

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  • Sebastian Goebel

    (Justus Liebig University Giessen)

  • Barbara Weißenberger

    (Heinrich Heine University Düsseldorf)

Abstract

Following recent corporate accounting scandals and governance failures, there has been a renewed interest in dysfunctional employee behaviors as potential drawbacks of financial goal-setting. Our study therefore assesses the impact of tight financial results controls as a cause for common behavioral displacements like information manipulation or gaming behavior in combination with countervailing effects of informal controls and management accountants’ business orientation as potential remedies. Based on a cross-sectional survey among 295 large- and medium-sized companies, our results show that even though a strong emphasis on financial results controls is associated with dysfunctional behaviors, higher levels of informal means of control and a more intense business orientation of management accountants are associated with a decrease of behavioral displacements. Our paper contributes to literature in a twofold way. First, it adds to the extant management accounting and control literature by providing comprehensive insights into the interplay between tight financial controls, informal controls, and management accountants’ role-taking behaviors. Second, by using a large-scale survey design, our results reflect a broad array of organizations and control situations.

Suggested Citation

  • Sebastian Goebel & Barbara Weißenberger, 2016. "The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(1), pages 69-101, April.
    • Handle: RePEc:spr:schmbr:v:17:y:2016:i:1:d:10.1007_s41464-016-0005-8
    DOI: 10.1007/s41464-016-0005-8
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