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Title:The effects of contract framing on misconduct
Author(s):Nichol, Jennifer Eve
Director of Research:Chen, Clara
Doctoral Committee Chair(s):Chen, Clara
Doctoral Committee Member(s):Peecher, Mark; Autrey, Romana; Mahoney, Joseph
Department / Program:Accountancy
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Contract framing
Abstract: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.
Issue Date:2015-04-16
Rights Information:Copyright 2015 Jennifer Nichol
Date Available in IDEALS:2015-07-22
Date Deposited:May 2015

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