Keywords

social-mission organizations, not-for-profit organizations, performance-based pay, misreporting, socially oriented misreporting, framed field experiment

Abstract

We examine the effect of performance-based pay on misreporting intended to benefit a social mission. We show that performance-based pay decreases people’s propensity to misreport for a social mission in a not-for-profit setting (Experiment 1). We similarly show that in a for-profit setting, performance-based pay also decreases misreporting propensity for a social mission, although not for a non-social mission (Experiment 2). Finally, using a framed field experiment with participants attending a conference hosted by a real charity, we show that performance-based pay reduces actual misreporting when misreporting leads to more donations for the charity (Experiment 3). These results are consistent with our theory suggesting that, relative to fixed pay, performance-based pay imposes additional costs on misreporting employees’ self-concepts of benevolence and honesty.

Original Publication Citation

Jessen L. Hobson, Ryan D. Sommerfeldt, Laura W. Wang; Cheating for the Cause: The Effects of Performance-Based Pay on Socially Oriented Misreporting. The Accounting Review 1 September 2021; 96 (5): 317–336. https://doi.org/10.2308/TAR-2019-0357

Document Type

Peer-Reviewed Article

Publication Date

2021-09-01

Publisher

The Accounting Review

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Assistant Professor

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