Authors: Vincent K. Chong, Rindah F. Suryawati
Addresses: Accounting and Finance Discipline (M250), UWA Business School, The University of Western Australia, 35 Stirling Highway, Crawley, Western Australia 6009, Australia. ' Accounting Department, Economic Faculty, Trunojoyo University, JL. Raya Telang, P.O. Box 2, Kamal, Madura, Indonesia
Abstract: This paper examines the effect of job rotation policy as a control mechanism in preventing managerial escalation of commitment under an agency problem setting. A total of 54 business students participated in a laboratory experiment. A 2 × 2 between-subjects ANOVA was used to test the hypotheses developed for this study. The independent variables are information availability (public and private) and job rotation policy (present and absent). The dependent variable is project managers| decision for continuing or discontinuing a failing or unprofitable investment project. The results reveal that project managers will discontinue an unprofitable project in the presence rather than absence of job rotation policy under a private information situation. This result suggests that job rotation policy can be used as an effective de-escalation strategy.
Keywords: commitment escalation; job rotation policy; public information; private information; information availability; project management; investment projects; de-escalation strategy; resource commitment; project evaluation.
International Journal of Accounting, Auditing and Performance Evaluation, 2011 Vol.7 No.3, pp.176 - 199
Available online: 26 Jun 2011 *Full-text access for editors Access for subscribers Purchase this article Comment on this article