The Impacts of Management Control Systems on Adaptive Performance

Wirecard, a Payments Firm in Germany, lost more than 95% of its value just in a day in the last month. The company has been accused of a 1.9 bn euros hole in its finances. The evidence shows that its staff fraudulently engaged in falsifying accounts and manipulating sales and profit for a decade . This scandal is probably the biggest accounting scandal in the world since 2001 when Enron collapsed. Occurrence of such big scandals calls for better understanding of how such frauds are organized and kept hidden from the auditors. Even though almost all of the accounting scandals have occurred in teams, accounting research has mainly focused on the individuals to understand manipulative behaviors and ignored the fact that such frauds require a team to conspire and coordinate the activities. This thesis aims to investigate fraud in teams by taking into account the social dynamics that lead to or facilitate team fraudulent behaviors. It aims to uncover the drivers and shed light on the design of management control systems such as monitoring systems, reporting systems, or performance measurement and compensation systems that can minimize team fraudulent behaviors.