Ethical control on repairing a user's trust based accounting beliefs

Organizations rely on controls to minimize distortions of accounting information. Nonetheless, users of accounting information often encounter preparer distortions from a lack of preparer knowledge and/or objectivity. This study examines the process to repair a user's damaged beliefs following an encounter with preparer bias or preparer error. Users' beliefs are examined in the context of trust to understand assessments of accounting information as a subjective rather than objective judgment. The effects of an organization's control response to error (bias) discovery on repairing a user's damaged beliefs about accounting information are investigated. In general, the research question examines whether a user's trust based accounting beliefs are shaped only through one's direct experience with an information preparer, or indirectly by controls governing preparer behavior. Based on experimental data from 159 participants, an organization's ethical control response repairs a user's damaged beliefs following preparer bias less effectively than a non ethical control response following preparer error. Controls governing preparer behavior are found to shape a user's beliefs about accounting information in some scenarios, while in others only his or her direct experience with the information preparer matters. Overall, findings from this study demonstrate economically equivalent distortions of accounting information have psychologically different sequences on a user's beliefs about accounting information.