System Justification Theory: Synthesizing and Applying Its Theoretical Motivations in Behavioral Accounting Research
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University of Central Florida STARS Electronic Theses and Dissertations, 2004-2019 2019 System Justification Theory: Synthesizing and Applying its Theoretical Motivations in Behavioral Accounting Research Wioleta Olczak University of Central Florida Part of the Accounting Commons Find similar works at: https://stars.library.ucf.edu/etd University of Central Florida Libraries http://library.ucf.edu This Doctoral Dissertation (Open Access) is brought to you for free and open access by STARS. It has been accepted for inclusion in Electronic Theses and Dissertations, 2004-2019 by an authorized administrator of STARS. For more information, please contact [email protected]. STARS Citation Olczak, Wioleta, "System Justification Theory: Synthesizing and Applying its Theoretical Motivations in Behavioral Accounting Research" (2019). Electronic Theses and Dissertations, 2004-2019. 6549. https://stars.library.ucf.edu/etd/6549 SYSTEM JUSTIFICATION THEORY: SYNTHESIZING AND APPLYING ITS THEORETICAL MOTIVATIONS IN BEHAVIORAL ACCOUNTING RESEARCH by WIOLETA CELINA OLCZAK B.S. Purdue University, 2013 M.Acc. Purdue University, 2014 A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Kenneth G. Dixon School of Accounting in the College of Business Administration at the University of Central Florida Orlando, Florida Summer Term 2019 Major Professors: Theresa Libby, Robin Roberts © 2019 Wioleta C. Olczak ii ABSTRACT This dissertation consists of two studies on System Justification Theory, hereafter SJT. SJT (Jost and Banaji 1994) is a psychology theory stating that individuals justify the status quo even if doing so is against their own or their group’s interest (Jost et al. 2004). Comprised of twenty propositions, SJT attempts to explain social and psychological factors driving individuals to perceive the social system as legitimate. These factors also drive individuals to support and maintain the social system. The synthesis and application of this psychological theory in behavioral accounting research is limited, but could provide explanatory evidence on individual decision-making in accounting. The first study of this dissertation synthesizes SJT’s four foundational theories – cognitive dissonance, social identity, social dominance, and belief in a just world – in behavioral accounting research, specifically focusing on two predominantly used theoretical motivations, cognitive dissonance and social identity theory. Behavioral accounting and corporate social responsibility (CSR) have increasingly become more complex as interest in these two areas continues to grow. The first study reviews prior behavioral accounting research that applied cognitive dissonance or social identity theory, and then demonstrates how the application of SJT in behavioral accounting research addresses more complex research questions that cannot be addressed solely from one or a combination of SJT’s four foundational theories. The second study then applies SJT’s theoretical motivations in a complex managerial accounting setting by investigating whether maintaining the status quo is a factor explaining managers’ decisions to overstate environmental capital expenditure (ECE) projections. This study uses an experimental design to understand whether the presence of an overstatement status quo iii and a system threat affects managers’ decisions to overstate environmental projections. The results indicate that managers are more likely to overstate ECE projections when the industry exhibits an overstatement status quo. Additionally, this propensity to overstate ECE projections is further exacerbated when managers face a stakeholder threat, suggesting they “dig in their heels” and maintain the status quo. This study extends environmental accounting research by demonstrating that the societal status quo affects managers cognitively and psychologically as they make environmental disclosure decisions. Results also contribute to practice by shedding insight as to why managers make certain environmental disclosure decisions. Specifically, the results show that the social system impacts managers’ willingness to use environmental disclosures as a legitimating tool. Overall these two studies contribute to behavioral accounting research by exploring and applying a psychological theory in a managerial environmental accounting setting. It demonstrates how a commonly used psychology theory that has never been utilized in accounting research could address broad and complex accounting topics. iv ACKNOWLEDGMENTS I would like to thank my committee, Dr. Theresa Libby, Dr. Robin Roberts, Dr. Den Patten, and Dr. Yu Tian for their constructive feedback and guidance throughout the dissertation process. I have to further extend my appreciation to Dr. Theresa Libby whose role was instrumental in my progress as a researcher. I know that I am privileged to receive her continued support and mentorship. I am also grateful to Dr. Robin Roberts and Dr. Den Patten as their attention to detail and prior research helped shape my dissertation. I also appreciate and thank the Dixon School of Accounting for graciously supporting me through the doctoral program, including Dr. Robin Roberts, Dr. Theresa Libby, Dr. Khim Kelly, and Dr. Sean Robb. My interactions with these professional individuals have shaped me as an academic and individual. Further appreciation has to be given to Dr. Khim Kelly for showing me patience and teaching me to be a more astute researcher. I also would like to send a special thanks to Dr. Lisa Baudot, Dr. Khim Kelly, Dr. Jared Koreff, Dr. Elizabeth Altiero, Dr. Jeffrey Reinking, and Dr. Michelle Rodrigue for providing me specific feedback on my dissertation. Thank you to Dr. Joseph Johnson, Dr. Elizabeth Altiero, Jeffrey Reinking, Dr. Yu Tian, and Dr. Wallace for allowing me to recruit students for my research. I finally thank the Ph.D. students, faculty, and staff of the Dixon School of Accounting for a wonderful Ph.D. experience. I am also most grateful for the continued support of my family and friends. A special heart-felt thank you goes to my sister, Sylwia Olczak, and my brother, Roland Olczak, for their encouragement. Finally and most importantly, I thank Steve Smock, my wonderful fiancée for his support, encouragement, and understanding. Without all these individuals, I would not have been able to successfully complete my dissertation. v TABLE OF CONTENTS LIST OF FIGURES ....................................................................................................................... ix LIST OF TABLES .......................................................................................................................... x GENERAL INTRODUCTION ....................................................................................................... 1 Study One: Motivating and Explaining Behavioral Accounting and Corporate Social Responsibility Research through System Justification Theory .................................................. 2 Study Two: The Psychological Influences Driving Management’s Disclosure of Overstated Environmental Projections .......................................................................................................... 4 Overall Contribution ................................................................................................................... 7 References ................................................................................................................................... 8 STUDY ONE: MOTIVATING AND EXPLAINING BEHAVIORAL ACCOUNTING AND CORPORATE SOCIAL RESPONSIBILITY RESEARCH THROUGH SYSTEM JUSTIFICATION THEORY ........................................................................................................ 10 Introduction ............................................................................................................................... 10 Accounting Research using SJT’s Foundational Theories ....................................................... 14 Cognitive Dissonance ........................................................................................................... 15 Social Identity Theory........................................................................................................... 18 Social Dominance Theory..................................................................................................... 21 Belief in a Just World ........................................................................................................... 22 System Justification Theory ...................................................................................................... 23 Application of System Justification Theory in Behavioral Accounting Research ............... 24 Implications for Accounting Research .................................................................................. 25 Conclusion ................................................................................................................................ 31 vi References ................................................................................................................................. 34 STUDY TWO: THE PSYCHOLOGICAL INFLUENCES DRIVING MANAGEMENT’S DISCLOSURE OF OVERSTATED ENVIRONMENTAL PROJECTIONS .............................. 40 Introduction ............................................................................................................................... 40 Theory and Hypotheses ...........................................................................................................