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Reciprocity and Financial Information Relevance
| Title: | Reciprocity and Financial Information Relevance |
| Author: | McDowell, Evelyn Aniton |
| Description: | The goal of this study is to provide direct evidence of the relationship between donations and the use of financial information by donors. In addition, the study explores how the motivation to reciprocate influences the use of financial information and donor choice. As one of the most widespread and basic norms of human culture, reciprocity requires that one person try to repay what another person has given. This sense of future obligation enables the development of various kinds of continuing relationships, transactions, and exchanges that are beneficial to society. Social motives, such as reciprocity, drive behavior and outcomes; yet, these are often ignored in accounting research. An underlying assumption in accounting research is that donors are swayed by financial information. However, there is little direct evidence on this point. This study provides data on how donors actually use financial information in their decision process. This study hypothesizes, using a model of social preferences, that the rule of reciprocity will bias judgment and influence information acquisition and choice. The study applies a pre-decisional research method that tracks the information selected by subjects and uses a dictator game to investigate the relevance of financial information to decision makers. In the experiment, subjects are given small gifts from nonprofit organizations and then are asked to allocate resources between themselves and organizations, using the financial and non-financial data displayed on web pages to facilitate the decision process. The findings of this study indicate that reciprocity is a motivator that affects the level of donations and the amount of effort subjects put forth in their decision-making process. The program ratio, a supposedly salient piece of financial information and purported to play a significant role in donor’s investment choice, is not the overwhelming factor in the decision to contribute to an organization. In addition, this study provides evidence that non-financial information is useful in donor decision making and, in some cases, makes accounting information less relevant. Overall, the findings indicate that reciprocity affects donor decision making and the use of financial information. |
| Permanent Link: |
http://rave.ohiolink.edu/etdc/view?acc_num=case1144437522
http://hdl.handle.net/2374.OX/16640 |
| Date: | 2006 |
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