Reporting Distortion is Like Lying, But Operating Distortion is Like Stealing

61 Pages Posted: 17 Aug 2016 Last revised: 22 Mar 2021

See all articles by Jeremiah W. Bentley

Jeremiah W. Bentley

Isenberg School of Management, University of Massachusetts Amherst

Matthew J. Bloomfield

The Wharton School of the University of Pennsylvania

Robert J. Bloomfield

Cornell University - Samuel Curtis Johnson Graduate School of Management

Tamara A. Lambert

Lehigh University

Date Written: February 1, 2021

Abstract

Prior research documents that elite US managers see reporting distortions (RD) as less acceptable than operating distortions (OD) for hitting performance targets. We show that such “RD aversion” declines with socioeconomic status and perceptions of the distorter’s deservingness, and rises with social conservatism. RD is seen as more deceptive and unauthorized than OD, especially among those who see the distorter as less deserving, while OD is seen as more harmful than RD regardless of deservingness. When OD causes serious harm, respondents exhibit OD aversion, and more so when they place more value on benevolence and fairness, and less so when they place more value on loyalty, obedience and purity. All of these patterns are consistent with a simple semantic model in which people see RD as akin to lying (a false statement intended to deceive), but see OD as akin to stealing (a wrongful enrichment that harms another).

Keywords: Earnings Management, Ethics, Survey Research, Operating Distortion, Reporting Distortion

JEL Classification: M41

Suggested Citation

Bentley, Jeremiah W. and Bloomfield, Matthew J. and Bloomfield, Robert J. and Lambert, Tamara A., Reporting Distortion is Like Lying, But Operating Distortion is Like Stealing (February 1, 2021). Available at SSRN: https://ssrn.com/abstract=2823705 or http://dx.doi.org/10.2139/ssrn.2823705

Jeremiah W. Bentley

Isenberg School of Management, University of Massachusetts Amherst ( email )

Department of Accounting
Amherst, MA 01003
United States

Matthew J. Bloomfield

The Wharton School of the University of Pennsylvania ( email )

1325 Steinberg-Dietrich Hall
3620 Locust Walk
Philadelphia, PA PA 19103-1724
United States
6073513042 (Phone)
6073513042 (Fax)

Robert J. Bloomfield (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

450 Sage Hall
Ithaca, NY 14853
United States
607-255-9407 (Phone)
607-254-4590 (Fax)

Tamara A. Lambert

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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