Growth mindset, role conflict, and financial misreporting

Abstract

This paper investigates the relation between a business unit (BU) controller’s mindset, role conflict, and financial misreporting. ‘Mindset’ is based on implicit person theories and ranges from the deeply held belief on whether, in general, people can learn, develop and change throughout their lives (growth mindset), or whether, for example, one's abilities and character are inherited and thus unmalleable (fixed mindset). While having a growth mindset is beneficial for learning and overcoming challenges (e.g., facing competing duties), it leads to a more dynamic view on breaking rules. Using survey data from 180 BU controllers, I find that a growth mindset is negatively associated with the BU controller’s perceived level of role conflict, which is positively related to financial misreporting. However, a growth mindset is positively associated with misreporting and strengthens the relation between role conflict and misreporting. The total effect is positive and significant when role conflict is high.