Asymmetric Adjustment of Control

Victor van Pelt

In this study, I examine how principals adjust their control over agents depending on their controlling experience. Principals should be equally willing to decrease their control over agents as they are to increase their control over agents. However, building on theory in psychology, I predict that controlling agents in the past reinforces a principal’s belief that agents are self-interested and that they should be controlled. Therefore, principals should be less willing to decrease their control over agents than they are to increase their control over agents. The results of my experiment support my predictions and also reveal that the asymmetry in principals’ control adjustments disappears when they have less time to reinforce the belief that agents are self-interested before their control adjustment and more time to revise it after their control adjustment. My study contributes to the accounting literature by showing that experience with controlling agents may cause principals to disproportionally hold onto to their control.

Are All Readers on the Same Page? Predicting Variation in Information Retrieval from Financial Narratives

Ties de Kok, Christoph Sextroh, and Victor van Pelt

Retrieving information from financial narratives is a complex process that depends on how the text characteristics of narratives interact with the financial literacy of users. In this study, we develop a comprehensive measure for variation in information retrieval based on observed user behavior that is also able to incorporate understudied text characteristics such as the semantics and content of a narrative. Using a tool that tracks reading and marking behavior in a controlled environment, we first document how users with varying degrees of financial literacy retrieve information from financial narratives. We find significant variation among financial literacy groups that cannot be solely explained by text characteristics related to processing costs. Next, we use state-of-the-art machine-learning to predict variation in information retrieval for out-of-sample financial narratives, and we show that these predictions are incrementally associated with the post-announcement return volatility. Overall, our results suggest that efforts by regulators and corporations to simplify text characteristics of corporate communications might not resolve all differences in how users retrieve information from financial narratives.

Does Managerial Reporting Still Matter? An Experimental Investigation of Laboratory Hierarchies

Farah Arshad, Bart Dierynck, and Victor van Pelt

Over the past several decades, technological advancements in information technology and data science have increasingly enabled firms to produce and distribute information, which challenges long-standing ideas about the role of managerial reporting in firms. We design a series of laboratory hierarchies to examine whether granting reporting responsibility to managers has a purpose beyond eliciting information from managers. Using three experimental treatments, we disentangle the different effects produced by managers’ reporting choices, and we establish that granting managers responsibility for reporting may have a purpose beyond the elicitation and distribution of information managers possess. We discuss the implications of our findings for managerial reporting research and practice.

Doing What’s Right: The Impact of Rotation Policies on Managers’ Reports about Operational Distortion

Eddy Cardinaels, Bart Dierynck, and Victor van Pelt

Although rotation policies are prevalent in practice, we know remarkably little about their consequences for reporting practices in firms. We examine how rotating managers across business units impacts their willingness to report about operational distortions to performance measurement at business units. The results of our laboratory experiment reveal rotation policies cause managers to report more information about operational distortions while firms reward managers similarly for their reports regardless of the rotation policy in place. We establish that the prospect of rotating to another business unit triggers managers to view their reporting decision less as an economic decision and more as a decision that enables them to “do what’s right” for their firm. We discuss the implications of our findings for academic research on rotation policies and for firms looking to resolve operational distortions and improve how they measure performance at business units.

The Sorting Benefits of Discretionary Adjustment to Performance-based Pay

Bart Dierynck and Victor van Pelt

We use a laboratory experiment to examine whether adding discretionary adjustment to performance-based pay facilitates the attraction of employees that identify more strongly with the organization’s objectives. Our conceptualization of identification is grounded in identity economics and predicts that employees who identify more strongly with the organization’s objectives exert greater effort toward those objectives. Building on this conceptualization, we predict that employees anticipate that managers will adjust performance-based pay more (less) favorably when employees reveal strong (weak) identification with the organization’s objectives. Accordingly, when managers can adjust performance-based pay, employment contains a feature that benefits (disadvantages) employees with strong (weak) identification, leading to a sorting effect on identification. Consistent with our prediction, we find that the difference in preferences for performance-based pay between employees with strong and weak identification is larger when performance-based pay is accompanied by discretionary adjustment than when it is not. We also confirm that employee identification increases employee effort toward the organization’s objectives. Our study contributes to the literature on discretionary adjustment by documenting a benefit of discretionary adjustment not previously considered in the extant literature.


WHU - Otto Beisheim School of Management

  • Conducting and Communicating Research (Advanced Undergraduate Course)
  • Human Data Elicitation Tools (Advanced Undergraduate Course)

Tilburg University

  • Behavioral Analysis of Accounting (Ph.D and Research Master Course)
  • MSc Thesis Accounting (Advanced Graduate Course)
  • Management Accounting (Intermediate Undergraduate Course)
  • Financial Accounting (Introductory Undergraduate Course)


Questionnaire with Page and Question Randomization for oTree

Lecture on Experimental Accounting Research and oTree

A Few Writing Aspirations