Your Gain My Pain? The Effects of Accounting Information in Uncertain Negotiations

53 Pages Posted: 14 Apr 2016

See all articles by Samy Essa

Samy Essa

University of Twente

Henri C. Dekker

Vrije Universiteit Amsterdam

Tom Groot

VU University Amsterdam - Amsterdam Research Center in Accounting

Date Written: April 12, 2016

Abstract

Prior studies on buyer-supplier negotiations show that refined accounting information can enhance negotiation processes and outcomes. We extend these studies by considering the influence of uncertainty, which is commonly present during negotiations. Uncertainty increases friction between negotiators as they take different reference points, exacerbating the level of conflict. We theorize that refined accounting information, even when unrelated to the source of uncertainty, helps to limit its adversarial effects on behavior and outcomes by enabling negotiators to identify mutually beneficial tradeoffs. We develop an experiment in which 89 dyads of buyers and suppliers participate to test our expectations about how uncertainty interacts with accounting information in affecting negotiation behavior and outcomes. Results show that uncertainty reduces negotiators’ use of integrative tactics relative to distributive tactics, which in turn negatively influences joint profit. Refined accounting information, however, weakens the negative impact of uncertainty on behavior, mitigating the negative impact on joint profit.

Keywords: Buyer-supplier negotiations, uncertainty, accounting information, negotiation tactics, negotiation outcomes.

JEL Classification: M41

Suggested Citation

Essa, Samy and Dekker, Henri C. and Groot, Tom, Your Gain My Pain? The Effects of Accounting Information in Uncertain Negotiations (April 12, 2016). Available at SSRN: https://ssrn.com/abstract=2763417 or http://dx.doi.org/10.2139/ssrn.2763417

Samy Essa (Contact Author)

University of Twente ( email )

Postbus 217
Twente
Netherlands

Henri C. Dekker

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

Tom Groot

VU University Amsterdam - Amsterdam Research Center in Accounting ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

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