This study examines the joint effect that probabilistic audits and compensation interdependence have on misreporting. In an experiment that holds the true detection rate equal, I find participants perceive a probabilistic audit to be more effective (i.e., more likely to detect misreporting) when...

This study examines the effects of profit-sharing on honesty in managerial reporting. While profit-sharing plans are widely used, there remains a need for understanding how profit-sharing plans affect honesty in managerial reporting. We investigate two commonly observed profit-sharing plans...

We use a laboratory experiment to examine a multitask environment common to practice, in which managers have multiple responsibilities, including both managerial reporting, as in participative budgeting settings, and effort provision toward daily tasks. Consistent with typical contracting...