The Association Between Controllers’ Empathy and Their Submission to Managers’ Emotional Pressure

Whereas controllers are expected to withstand managerial pressure on how they report corporate performance, Eskenazi et al. (2016) showed that the extent to which they are able to do so relates to the measure of mirror neuron system responsiveness captured by electroencephalography (EEG). We extend these findings with an investigation of controllers’ empathy related to their misreporting in order to support business unit (BU) managers’ interest. 30 accounting and finance professionals took part in our study, in which we measured their empathy network activation during observation of emotions using functional magnetic resonance imaging (fMRI). Their inclination to misreport was explored with six empathy-invoking accounting scenarios. We analyzed whether participants’ responses were associated with their activity of affective or cognitive empathy network. Our findings show that integrity violations are correlated with activation of the cognitive empathy regions, but only in those scenarios in which controllers concede to managers’ interests related to BU. If, on the other hand, the interest are presented as manager’s personal interest, we do not find that controllers’ decisions would be associated with empathy. Our findings suggest the controllers are able to flexibly regulate cognitive empathy depending on the type of accounting decision at stake. We triangulated the neural analysis with ten in-depth interviews with the participants to obtain a further understanding of the underlying reasons for their decisions.