The effects of contract framing on misconduct

This study examines the effects of incentive contract framing on two types of misconduct: misreporting and shirking. I conduct a 2x2 between subjects experiment, manipulating incentive contract framing (Bonus/Penalty) and the awareness of the opportunity to misreport (Before Effort/After Effort). I predict and find that (1) penalty contracts cause a higher rate and degree of misreporting, (2) this greater misreporting occurs due to a greater sense of entitlement to the incentive funds, and (3) even though misreporting occurs more with penalties, people shirk more in response to a bonus. Collectively, this study’s theory and results indicate that while penalty contracts can increase effort relative to bonus contracts, they also encourage greater dishonesty in reporting when that effort is not successful.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Nichol, Jennifer Eve

Contributors dc:contributor

• Chen, Clara
• Peecher, Mark
• Autrey, Romana
• Mahoney, Joseph

• Contract framing
• Misreporting

Statement dc:rights

• Copyright 2015 Jennifer Nichol

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/78388

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/78388