The role of accountability in reducing the impact of affective reactions on capital project decisions

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran

2 M.Sc student in Management Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran

Abstract

Purpose: The current research examines the effect of affective reactions on capital project decisions and whether accountability can reduce the effect of affective reactions in individuals’ decisions.
Method: We use an experimental method with a mixed 2*3 factorial design. Manipulated variables are affective reaction and accountability. The dependent variable is managers’ decision regarding choosing or rejecting an investment project. Our sample includes 84 professionals randomly assigned to three groups.
Results: Our results show that participants are more likely to choose the economically non-preferred project when proposed by a manager triggering a positive affective reaction, but accountability reduces this tendency. Also, participants are less likely to select the economically preferred project when proposed by a manager triggering a negative affective reaction and accountability did not reduce this tendency. Conclusion: This research shows how a psychological factor can reduce the quality of judgment and decision making (JDM) in the field of capital project decisions. In addition, it shows the conditions under which the influence of this factor reduces and the quality of JDM improves.
Contribution: Awareness of psychological factors affecting JDM and knowledge of effective methods to improve JDM contributes to the capital project literature.

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History

  • Receive Date: 07 August 2022
  • Revise Date: 24 February 2023
  • Accept Date: 03 March 2023

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