【正文】 THE EFFECTS OF PRIOR INVOLVEMENT AND ACCOUNTABILITY ON ASSET IMPAIRMENT DECISIONS Randall W. Rentfro Nova Southeastern University ABSTRACT This study examines whether longlived asset impairment decisions are biased when the decision maker was also involved in the original decision to invest in the asset. In addition, the study tests whether accountability for impairment decisions attenuates bias in the judgments made by individuals who were involved in the investment decision. The theoretical bases for the study’s research question and hypothesis e from the accountability and escalation of mitment literatures as well as a psychological theory previously untested in the accounting domain, the Catastrophe Theory of Attitudes (CTA). The study’s findings suggest that CTA may have potential to explain certain behaviors of accountants. Furthermore, accountability appears to mitigate bias stemming from prior involvement in the investment decision. INTRODUCTION This study examines (1) whether longlived asset impairment decisions are affected by decisionmaker’s involvement in the decision to invest in the asset and (2) whether accountability for the asset impairment decision mitigates biases in the decisionmaker’s judgment resulting from that prior involvement. The motivation for the study stems from the decisionmaking process required by Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of LongLived Assets(Financial Accounting Standards Board, 2020). The decisionmaking process begins with the accountant scanning the environment for indicators of asset impairments. If the accountant determines that an indicator is present, the accountant performs a recoverability test, which involves forecasting future cash flows from the asset, to determine if the asset is impaired. If the test shows that the asset is impaired, the accountant writes down the asset to its fair value. Throughout this process, the accountant must exercise significant professional judgment. As a result, the accountant’s asset impairment decisions may be affected by the accountant’s biases. This study looks at one source of bias suggested in the escalation of mitment literature: involvement in the original decision to invest in the asset. The escalation of mitment literature demonstrates that when an accountant is responsible for an investment decision, subsequent judgments made by the accountant concerning the asset may be affected. For example, the accountant will increase his or her mitment to a failing investment when given the chance (see, for example, Schulz and Cheng, 2020). Similarly, an accountant’s asset impairment judgments may be affected when he or she is involved in the investment decision. The accountability literature suggests that, under certain conditions, accountability may attenuate bias(Lerner and Tetlock, 1999). If an asset impairment decision has a material impact on the financial statements, an accountant’s decision that an asset is (is not) impaired likely will be questioned by an external auditor. The accountant must justify the decision, which is one form of accountability pressure (DeZoort, Harrison, amp。 Taylor, 2020). This study considers whether justifying asset impairment decisions mitigates biases resulting from involvement in the investment decision. This study uses an experiment to examine the effects of involvement and accountability on longlived asset impairment decisions. Participants in the experiment were asked to make a series of asset impairment decisions relating to an investment in an entertainment plex. The experiment uses a case setting to provide participants with information about the plex over a fiveyear period. The participants assessed the probability that the assets of the entertainment plex were impaired at the end of each year in the fiveyear period. The results of the study suggest that accountability attenuated biases resulting from prior involvement in the investment decision. In addition, the decisions made by participants in the involvement condition follow a pattern that is consistent with a psychological model of attitude formation and change: the Catastrophe Theory of Attitudes (Latane amp。 Nowak, 1994). As a result, the study helps to link the escalation of mitment literature with a psychological theory which, up to now, has not been applied in an accounting domain. The remainder of the paper is organized as follows. The next section provides a brief summary of SFAS No. 144. The third section provides a review of the relevant literature and develops the research question and the hypothesis examined in this study. The fourth section explains the experiment and is followed by a section presenting the results of the statistical analyses. The final section provides discussion and conclusions. Recognition and measurement process for potential asset impairments SFAS Statement of Financial Accounting Standards No. 144 requires a threestep recognition and measurement process for potential asset impairments. In the first step, accountants review an entity39。s operations and scan the environment to determine if any indicators of potential asset impairments exist. SFAS No. 144 provides examples of impairment indicators (see Table 1)。 however, the Financial Accounting Standards Board (FASB) did not intend for the list of impairment indicators to be exhaustive. TABLE 1 Example Asset Impairment Indicators Statement of Financial Accounting Standards No. 144 (FASB, 2020) a A significant decrease in the market price of a longlived asset (asset group) b A significant adverse change in the extent or manner in which a longlived asset (asset group) is being used or in its physical condition