Accuracy in judging the nonlinear effects of cost and profit drivers

• 成果类型: Article
• 署名作者: Farrell, Anne M.; Luft, Joan; Shields, Michael D.
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Michigan State University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/car.24.4.4
• 发表日期: 2007
• 页码: 1139-+
• 关键词: performance; cue; JUDGMENT; feedback; models; misperceptions; hypotheses; RESOURCES; magnitude; precision

摘要

Managers often make judgements about cost-driver and profit-driver relations using subjective analysis rather than statistical analysis of accounting data. We provide theory-consistent experimental evidence that, even when the strength and temporal contiguity of the relation between financial performance and its driver are held constant, the prediction task is relatively simple, and individuals have relevant training and experience, participants' differing mental representations of the cost-driver and profit-driver relations result in significantly different judgement accuracy. In the experimental setting in this study, judgement accuracy is higher when performance is measured as cost rather than profit. Judgement accuracy tends to be higher for more direct relations, and individuals mentally represent the cost-driver relation in the experimental task as a more direct causal chain than the profit-driver relation. We present supplementary evidence supporting the theory that accounting prompts participants to adopt cause-and-effect mental representations of varying directness between performance measures, rather than attending only to the sign and strength of the relation. Thus, an important consideration in the choice of performance measures should be cognitive properties as well as statistical properties of the measures in particular, the directness of the cause-and-effect mental representation that the performance measures prompt.