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The Impact of Production Variance Presentation Format on Employees’ Decision Making

Lasse Mertins

Lourdes Ferreira White

Advances in Management Accounting

ISBN: 978-1-78350-632-3

Publication date: 1 January 2014

Abstract

Purpose

This paper proposes and tests a model to explain the outcomes of three different information presentation formats. Based on cognitive fit theory, information visualization formats that best fit task characteristics are expected to lead to improved decision-making outcomes. We apply the Judgment and Decision-Making framework (Bonner, 2008) to investigate how certain factors can impact decision quality.

Design/methodology/approach

This study tests whether certain production variance presentation formats (percentages, dollar amounts, and schematic faces), task complexity, understanding of the presentation format, motivation, and effort increase the accuracy of a supervisor’s bonus calculation. A total of 281 students and professionals participated in this experiment. Their responses were examined using regression analysis.

Findings

Our results indicate that individuals mostly prefer the percentages presentation format and that the use of the percentages presentation format, a lower level of task complexity, and a better understanding of the variance presentation format lead to more accurate calculations in the experimental task.

Research implications

Our study provides a call for further research on factors that influence the choice of presentation format as a potentially fruitful area for management accounting researchers.

Practical implications

We exhort practicing management accountants to exert direct influence on employees’ decision making through the use of variance presentation formats that fit their tasks and promote understanding.

Originality/value

Our experiment introduced two major innovations: it uses an interactive data visualization approach allowing subjects to select their preferred presentation format; and it focuses on production variances, a topic that has received less attention in the academic managerial accounting literature, but is still very relevant to practitioners.

Keywords

Acknowledgements

Acknowledgments

The authors wish to thank participants of the 2012 Annual Meeting of the American Accounting Association, the Annual Conference of the Institute of Management Accountants, and the AAA Mid-Atlantic Region Meeting for their helpful comments. We are especially grateful for the members of the Institute of Management Accountants who agreed to participate in our survey. We would also like to thank Chih Jen Lin for her assistance in the data collection process, Lisa Stickney for her valuable feedback on the research methods, and Joseph White for his helpful comments on this manuscript.

Citation

Mertins, L. and White, L.F. (2014), "The Impact of Production Variance Presentation Format on Employees’ Decision Making", Advances in Management Accounting (Advances in Management Accounting, Vol. 23), Emerald Group Publishing Limited, Leeds, pp. 149-179. https://doi.org/10.1108/S1474-787120140000023005

Publisher

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Emerald Group Publishing Limited