De-escalation Strategy: The Impact of Monitoring Control on Managers' Project Evaluation Decisions

Chong, Vincent K.; Suryawati, Rindah F.
December 2010
Journal of Applied Management Accounting Research;2010, Vol. 8 Issue 2, p39
Academic Journal
The paper examines the effect of monitoring control as a control mechanism in preventing managerial escalation of commitment under an agency problem setting. A total of 74 business students participated in a laboratory experiment based on a 2x2 factorial analysis of variance (ANOVA) between-subjects design with random assignment. The independent variables are information availability (public and private) and monitoring control (present and absent). The dependent variable is project managers' decision for continuing or discontinuing a failing or unprofitable investment project. The results suggest that project managers will discontinue an unprofitable project in the presence rather than absence of monitoring control under a private information situation.


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