Starjournal Quotation Braumann, Evelyn C., Grabner, Isabella, Posch, Arthur. 2020. Tone from the top in risk management: A complementarity perspective on how control systems influence risk awareness. Accounting, Organizations and Society. 84 1-17.


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Abstract

Prompted by the weaknesses of standardized risk-management approaches in the aftermath of the 2008 financial crisis, scholars, regulators, and practitioners alike emphasize the importance of creating a risk-aware culture in organizations. Recent insights highlight the special role of tone from the top as a crucial driver of risk awareness. In this study, we take a systems perspective on control system design to investigate the role of tone from the top in creating risk awareness. In particular, we argue that both the interactive and the diagnostic use of budgets and performance measures interact with tone from the top in managing risk awareness. Our results show that interactive control strengthens the effect of tone from the top on risk awareness, whereas tone from the top and diagnostic control are empirically not interrelated with regard to creating risk awareness. To shed light on the boundary conditions of the proposed interdependencies, we further investigate whether the predicted interdependencies are sensitive to the level of perceived environmental uncertainty. We find that the effect of tone from the top and interactive control becomes significantly stronger in a situation of high perceived environmental uncertainty. Most interestingly, tone from the top and diagnostic control are complements with regard to risk awareness in settings of low perceived environmental uncertainty and substitutes at high levels of perceived environmental uncertainty.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Accounting, Organizations and Society
Citation Index SSCI
WU Journalrating 2009 A+
Starjournal Y
Language English
Title Tone from the top in risk management: A complementarity perspective on how control systems influence risk awareness
Volume 84
Year 2020
Page from 1
Page to 17
Reviewed? Y
DOI https://doi.org/10.1016/j.aos.2020.101128
Open Access N

Associations

People
Grabner, Isabella (Details)
External
Braumann, Evelyn C. (Aarhus University, Denmark)
Posch, Arthur (University of Bern, Switzerland)
Organization
Institute for Strategy and Managerial Accounting IN (Details)
Grabner (Details)
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