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How effective are social norm interventions? Evidence from a laboratory experiment on managerial honesty

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  • Gibson Brandon, Rajna
  • Wagner, Alexander F.
  • Tanner, Carmen

Abstract

Social norms can act as safeguards against corporate misconduct, but can also foster undesirable behavior. We conduct a laboratory experiment where we expose participants (in the role of CEOs) to social norms approving or disapproving of earnings management. There are systematic differences among individuals' reactions to the situational pressure. Specifically, individuals with strong preferences for truthfulness react less to both kinds of social norms. Self-signaling provides a convincing explanation of individual behavior. These findings have implications for the empirical analysis of managerial behavior and for the use of social norms as steering tools for corporate governance.

Suggested Citation

  • Gibson Brandon, Rajna & Wagner, Alexander F. & Tanner, Carmen, 2014. "How effective are social norm interventions? Evidence from a laboratory experiment on managerial honesty," CEPR Discussion Papers 9880, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9880
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    More about this item

    Keywords

    Crowding-out; Honesty; Conformity; Self-signaling; Situational social norms;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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