The work presented here investigates the process by which one group of individuals solves the problem of detecting deceptions created by other agents. A field experiment was conducted in which twenty‐four auditors (partners in international public accounting firms) were asked to review four cases describing real companies that, unknown to the auditors, had perpetrated financial frauds. While many of the auditors failed to detect the manipulations in the cases, a small number of auditors were consistently successful. Since the detection of (...) frauds occurs infrequently in the work of a given auditor, we explain success by the application of powerful heuristics gained from experience with deceptions in everyday life. These heuristics implement a variation of Dennett's intentional stance strategy, which is based on interpreting detected inconsistencies in the light of the Deceiver's (i.e., management's) goals and possible actions. We explain failure to detect deception by means of perturbations (bugs) in the domain knowledge of accounting needed to apply these heuristics to the specific context of financial statement fraud. We test our theory by showing that a computational model of fraud detection that employs the proposed heuristics successfully detects frauds in the cases given to the auditors. We then modify the model by introducing perturbations based on the errors made by each of the auditors in the four cases. The resulting models account for 84 of the 96 observations (i.e., 24 auditors × four cases) in our data. (shrink)

This study investigates the complexities in the relationship between perceptions of organizational politics and performance ratings by examining the moderating effect of impression management on that relationship. Expectancy theory was employed to better understand the moderating effect. We proposed that two kinds of impression management tactics occurred: supervisor-focused and job-focused, respectively. It was hypothesized that increased exercise of impression management would mitigate the negative effects of perceptions of organizational politics and performance ratings. Data were collected from 290 full-time employees of (...) ten state-owned enterprises in Taiwan. Hierarchical moderated regression analysis of data revealed that the job-focused tactics exerted a significant moderating effect on the relationship between perceptions of organizational politics and performance ratings. When perceptions of organizational politics are low, employees who engage in high levels of job-focused impression management tactics are more likely to gain better ratings than those who employ low-level tactics. (shrink)

The work presented here investigates the process by which one group of individuals solves the problem of detecting deceptions created by other agents. A field experiment was conducted in which twenty-four auditors (partners in international public accounting firms) were asked to review four cases describing real companies that, unknown to the auditors, had perpetrated financial frauds. While many of the auditors failed to detect the manipulations in the cases, a small number of auditors were consistently successful. Since the detection of (...) frauds occurs infrequently in the work of a given auditor, we explain success by the application of powerful heuristics gained from experience with deceptions in everyday life. These heuristics implement a variation of Dennett's intentional stance strategy, which is based on interpreting detected inconsistencies in the light of the Deceiver's (i.e., management's) goals and possible actions. We explain failure to detect deception by means of perturbations (bugs) in the domain knowledge of accounting needed to apply these heuristics to the specific context of financial statement fraud. We test our theory by showing that a computational model of fraud detection that employs the proposed heuristics successfully detects frauds in the cases given to the auditors. We then modify the model by introducing perturbations based on the errors made by each of the auditors in the four cases. The resulting models account for 84 of the 96 observations (i.e., 24 auditors × four cases) in our data. (shrink)

In this research, we examine the effects that customer perceptions of employee deception have on the customers’ attitudes toward an organization. Based on interview, archival, and observational data within the international airline industry, we develop a model to explain the complex effects of perceived dishonesty on observer’s attitudes and intentions toward the airline. The data revealed three types of perceived deceit (about beliefs, intentions, and emotions) and three additional factors that influence customer intentions and attitudes: the players involved, the beneficiaries (...) of the deceit, and the harm done by the perceived lie. We develop a model with specific propositions to guide organizations with respect to apparently deceitful behavior of their employees. Implications and directions for future research are provided, focusing on the question of whether organizations should consistently encourage honesty or train their employees to be effective liars. (shrink)