The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region

doi:10.1007/s10551-006-9286-z

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Please use this identifier to cite or link to this item: https://tkuir.lib.tku.edu.tw/dspace/handle/987654321/20227

Title:	The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region
Authors:	章正儀;C. Janie Chang;顏信輝;Yen, Hsin-hui
Contributors:	淡江大學會計學系
Keywords:	adverse selection;agency theory;moral development;project continuation
Date:	2007-12-01
Issue Date:	2009-11-30 12:38:15 (UTC+8)
Publisher:	Springer
Abstract:	According to agency theory, agents base their economic decisions on self-interests when adverse selection conditions exist. However, cognitive moral development theory predicts that ethics/morals may influence decision-makers not to behave egoistically. Rutledge and Karim (1999; Accounting, Organizations and Society 24(2), 173–184) find both the moral reasoning level of the managers and an adverse selection condition affect a manager’s project evaluation decisions significantly. Since prior studies have shown that national␣culture might influence the application of agency theory in project evaluation, this current study uses a different moral development measurement to reexamine Rutledge and Karim’s hypotheses in another culture. A total of 73 Taiwanese executive MBA students with an average of 12.17 years work experience participated in this study. We found that both moral development level and adverse selection conditions significantly affect managers’ project continuance decisions. The interaction effect of these two factors indicates that, when adverse selection conditions exist, participants with a high level of moral development exhibit less of a tendency to continue an unprofitable project than those with a low level of moral development. With subjects from a different culture, our results confirm the findings of Rutldege and Karim. That is, the effects of moral development and adverse selection conditions on managers’ project continuance decisions are robust and can be generalized to different cultures. Implications of the findings of this study to multinational firms are also discussed.
Relation:	Journal of Business Ethics 76(3), pp.347-360
DOI:	10.1007/s10551-006-9286-z
Appears in Collections:	[Graduate Institute & Department of Accounting] Journal Article

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