The Joint Effect of Organizational Identification and Internal Reporting Environment Openness on Budgetary Misreporting

Abstract

Many organizations are moving toward a more open, transparent working environment. However, a concurrent trend toward remote work in organizations could moderate the effect of this move toward organizational openness by reducing organizational identification. This study investigates the joint effect of organizational identification and reporting environment openness on managerial reporting behavior. Using an experiment, we find that weak versus strong organizational identification leads to greater slack creation in an open reporting environment, but this effect attenuates in a closed reporting environment. By speaking to the joint effect of internal reporting environment openness and organizational identification, this study contributes to our understanding of the theoretical drivers of misreporting and how they interact with concurrent trends in practice.