Secondary Titles (1)
- Harry C. Sauvain Chair
Professor Fisher's research interests focus on financial control in complex organizations and on the use of financial information in managerial decisions. His academic research has appeared in journals such as The Accounting Review, Decision Sciences, Behavioral Research in Accounting, Strategic Management Journal, Journal of Management Accounting Research, Journal of Cost Management, Sloan Management Review, Academy of Management Journal, Public Choice, Accounting, Organizations and Society, Journal of Accounting Literature among other journals.
Industry Expertise (4)
Training and Development
Areas of Expertise (5)
Managerial Control Systems
Financial and Non-Financial Control Systems
Faculty Fellowship (professional)
Faculty Fellowship (professional)
Ohio State University: Ph.D., Doctorate 1987
Performance Target Levels and Effort: Reciprocity across Single- and Repeated-Interaction SettingsAmerican Accounting Association
2015 We examine how reciprocity affects the relation between performance target levels and effort across single- and repeated-interaction settings. Using a laboratory experiment where participants make choices from a payoff matrix representing target and effort levels, we model a setting where employee-participants have economic incentives to respond to higher target assignments by superior-participants with higher effort. However, reciprocity could lead employees to reward low target assignments with high effort and punish high target assignments with low effort. In a single-interaction setting where only innate preferences can drive reciprocal behavior, we find that superiors select higher targets and that employees generally respond with higher effort. In a repeated-interaction setting where reciprocal behavior can emerge for strategic reasons, we find that superiors set lower targets and that employees generally respond to low targets with high effort and to high targets with low effort. Collectively, our results suggest that reciprocity plays a limited role in affecting target and effort levels in a single-interaction setting. Rather, reciprocity appears to emerge for more strategic reasons brought on by repeated interactions. As most work relationships extend over multiple periods, our results may help explain why organizations tend to set readily achievable performance targets.
Subordinates’ Knowing versus Sharing in Their Managers’ Incentives: The Effects on Buget Preparation and UseAmerican Accounting Association
2015 In participative budgeting settings, managers commonly rely on subordinates’ budgets to make planning estimates (cost forecasts) and often have incentives based on the quality of their judgments. However, the extent to which subordinates are aware of their managers’ incentives or participate in those incentives varies widely in practice. Advocates of greater pay transparency argue that it can foster a more trusting environment while proponents argue it can result in fairness concerns. Inclusion of subordinates in their managers’ incentive schemes (e.g., profit-sharing plans) can lead to greater goal alignment but there is minimal research examining the behavioral implications of doing so. We study the effects on subordinates’ budgeting honesty and the accuracy of managers’ planning estimates of these two features of the control environment: (1) the transparency of managers’ performance-contingent incentives (subordinates unaware versus subordinates aware) and (2) subordinates’ participation in their managers’ performance-contingent incentives (no participation versus participation). Results from a laboratory experiment indicate that subordinates who were aware of their managers’ performance-contingent incentives, but did not participate in them, adopted a norm of self-interested behavior and budgeted less honestly than those who were unaware of their managers’ incentives. Subordinates who participated in their managers’ performance-contingent incentives adopted a norm of other-regarding behavior and provided more honest budgets than those who were aware of the incentives, but did not participate in them. Managers’ forecast accuracy was significantly influenced by the honesty in subordinates’ budgets but our analysis also indicates that managers did not fully recognize the effects of the control environment features on subordinate budgeting behavior. Implications for theory and practice are discussed.
The Effect of Budget Authority and Budget Frame on Managerial Reporting and WelfareAccounting, Organizations and Society
2013 One principle use of budgets is to elicit private information from subordinates in order to allow superiors to make better decisions. However, self-interested subordinates may bias their budget reports for personal gain, thus reducing the value of their budget reports to superiors. We examine whether the framing of the budget request and who has authority to set the budget affect subordinates’ budget reports, budget levels, production, and subsequent welfare. Research and practice use various budget frames when subordinates are requested to submit budget information. In addition, firms structure the budget setting process in different ways. One key budget structure variable is which party has final authority to set the budget. As such, understanding how budget frames and budget authority affect subordinates’ behavior is important for interpreting the results of past research and informing practice. We find that the framing of the budget request does not affect subordinates’ budget reports. However, we find that who has authority to set the budget has a substantial impact on subordinates’ budget reports. Specifically, we find that subordinates’ reports are more accurate when subordinates have authority to set the budget than when superiors have this authority. Furthermore, many budgets are rejected by subordinates when superiors have authority to set the budget. As a result, in our setting, superiors’ welfare is greater when subordinates have authority to set the budget than when superiors have authority to set the budget. Our results suggest that superiors may be better off relying on subordinates’ non-pecuniary preferences instead of instituting formal controls in budget settings with information asymmetry.
Detecting Misreporting in Subordinates’ BudgetsAmerican Accounting Association
2013 The participative budgeting literature typically characterizes budget slack as reflecting the magnitude of the miscommunication between senders and receivers of budget information. However, to the extent managers can recognize and adjust for subordinate misreporting we assert that slack may overstate the degree of miscommunication. We conducted an experiment where subordinates had private information about actual costs, were incentivized to create slack, and set budgets without negotiation. Managers prepared cost forecasts based only on subordinate budget submissions, and their knowledge of the actual cost distribution and subordinates’ incentives to misreport. We manipulate managers’ incentives to prepare accurate forecasts of actual costs (present or absent). Consistent with our predictions, results show that managers’ appear to distinguish between budgets containing lower versus higher slack and placed greater reliance on budgets that were more informative about actual costs. Also in keeping with our prediction, provision of forecast accuracy incentives lead managers' to increase their reliance on subordinate budgets. Managers’ budget reliance decisions partially mediate the effects of both budget informativeness and forecast accuracy incentives on forecast accuracy. We discuss our study’s implications for theory and practice.
Using Budgets for Performance Evaluation: Effects of Resource Allocation and Horizontal Information Asymmetry on Budget Proposals, Budget Slack, and PerformanceAmerican Accounting Association
2002 Business executives and academics frequently criticize budget‐based compensation plans as providing incentives for subordinates to build slack into proposed budgets. In this paper, we examine whether either of two practices—using budgets to allocate scarce resources, or providing information about co‐workers—reduces budget slack and increases subordinate performance when organizations use budgets for performance evaluation. The results from our experiment show that using budgets for both resource allocation and performance evaluation not only eliminates budget slack, but also increases subordinates' effort and task performance. Additionally, we find that an internal reporting system that provides information about subordinates' budgets and performance to their co‐workers mitigates budget slack when superiors do not use budgets as a basis for resource allocation. These results highlight the synergies between the planning (resource allocation) and control (performance evaluation) functions of managerial accounting practices such as budgeting. Our results also suggest that by designing the internal information system to reduce information asymmetry among subordinates, the firm can increase subordinates' incentives to provide more accurate budgets.
Budgeting: An Experimental Investigation of the Effects of NegotiationAmerican Accounting Association
2000 Despite the common use of negotiations to set budgets in practice, accounting research has focused primarily on budgets set unilaterally by subordinates, while goal‐setting research in management has focused primarily on budgets set unilaterally by superiors. In addition, budgeting research in accounting has focused almost exclusively on the planning aspects of budgets to the exclusion of their motivational aspects. This study complements prior research in two ways. First, the study examines how budgets and the economic consequences of the budget‐setting process differ when budgets are set through a negotiation process vs. when set unilaterally. The study also considers factors associated with negotiation agreement and the relation between agreement and the economic consequences of negotiated budgets. Second, the economic consequences examined are budgetary slack and subordinate performance, allowing us to address the trade‐offs between the planning and motivational aspects of budgets. Negotiated budgets differ from unilaterally set budgets in a manner consistent with social norms and/or information transfer occurring during negotiations. Both the budgets and the economic consequences of the budgetsetting process differ when budgets are set through a negotiation process where superiors have final authority in the event of a negotiation impasse vs. when set unilaterally by superiors. Further, negotiation agreement significantly affects the economic consequences of negotiated budgets. Budgets set through a negotiation process ending in agreement contain significantly less slack. A failed negotiation followed by superiors imposing a budget has a significant detrimental effect on subordinate performance.