اثرات متقابل بین هزینه دانش حسابداری و ارائه فرمت در تصمیم گیری مبتنی بر هزینه

Most studies on cost-based decision-making examine the profit impact of cost reports that rely on different methods to allocate costs. In practice, firms’ cost reports often employ the same cost allocation method with subtle variations in the way that the cost data are presented. This paper examines experimentally the profit impact of a cost report’s presentation format in relation to a decision maker’s level of cost accounting knowledge. Using a customer profitability report prepared using activity-based costing and presented in either a tabular or a graphical format, participants analyze a complex pricing and resource allocation task that affects firm profitability. The results suggest a strong relation between presentation format and cost accounting knowledge. Specifically, decision makers with a low level of cost accounting knowledge attain higher profits when they use a graphical format in comparison to a tabular format. More surprisingly, graphs (versus tables) have an adverse effect on profits for users with a high level of cost knowledge. This result has broad implications: in order to facilitate the decisions of a variety of users of accounting data (e.g. managers, external investors, etc.), firms may need to adapt the presentation format of their accounting data to the level of accounting sophistication of the users.

The performance effects of different types of cost reports (variable versus absorption costing, volume-based versus activity-based costing) in relation to a number of contextual variables is the key focus of several previous studies on cost-based decision-making (e.g. Briers et al., 1999, Drake et al., 1999, Gupta and King, 1997 and Waller et al., 1999). This paper presents the results of an experiment conducted to study how different representations of identical underlying cost data affect cost-based decision-making and firm profitability. Specifically, I find unique evidence suggesting that the profit impact of tabular versus graphical representations of activity-based costing (ABC) data is dependent upon the accounting sophistication of the user, i.e. his or her level of cost accounting knowledge. Studying the joint effects of presentation format and a decision maker’s level of accounting knowledge is important for several reasons. First, different managers clearly have different levels of accounting knowledge (Dearman and Shields, 2001 and Stone et al., 2000). Firms’ information systems provide managers with reports that range from traditional tabular formats to graphical displays (So and Smith, 2002 and Sullivan, 1988). Many managers use elaborate cost reports for their daily decisions. Others encourage the use of “easy-to-understand” graphs (Mooney et al., 2000, Remus, 1987 and Yates, 1985) in the belief that a graphical representation (versus a tabular format) makes cost data accessible to all members of the firm, irrespective of their level of accounting knowledge. In spite of evidence of differential managerial knowledge, however, the extant literature does not indicate how managerial decision-making and, in turn, firm profits are affected (Sprinkle, 2003) when information is presented in different report formats to decision makers with different levels of accounting knowledge (Haynes and Kachelmeier, 1998 and Libby, 1981). Second, recent studies in accounting only address the separate effects of expertise and report format (Sprinkle, 2003), though such studies find that both affect cost-based decision-making. For instance, Dearman and Shields (2001) show that the level of a manager’s cost accounting knowledge is linked with the ability to correct for volume-based cost bias, and Bucheit (2003) shows that investment decisions change when cost reports explicitly contain the cost of capacity (compared to reports that do not). There is also some evidence that suggests the interaction of the two variables. For instance, Vera-Muñoz, Kinney, and Bonner (2001) show that the impact of alternative task representations depends upon the decision maker’s expertise. However, they employ only tabular reports based on either historical earnings or historical cash flows. Thus, the impact of tabular versus graphical representation of identical data in relation to a decision maker’s knowledge is an open question. Finally, although there is a strong belief that decision makers should benefit from graphical representation (Harvey & Bolger, 1996), research that compares the relative impact of graphical versus tabular formats remains inconclusive (Vessey, 1991). In an attempt to resolve the controversy, a few studies suggest looking at individual differences among the users of information (Amer, 1991, Chandra and Krovi, 1999 and Ganzach, 1993). The current study sheds light on this debate by testing whether accounting knowledge as a managerial characteristic helps to explain when certain report formats are associated with stronger performance than others in a cost-based decision task. To investigate these joint considerations, I conduct an experiment with presentation format as the between subjects factor. I measure a participant’s level of accounting knowledge, in addition to some common control variables, using research instruments suggested in prior studies (Bonner and Lewis, 1990, Cloyd, 1997 and Dearman and Shields, 2005). I create a complex task in which the participant’s realized profit depends upon both price and resource allocation decisions for a heterogeneous set of customers. All participants receive ABC-driven customer profitability data, presented in either a tabular or a graphical format (multicolored bar charts and trend charts). I measure profit performance objectively as the difference between a participant’s realized profit and the maximum profit that could be achieved in performing the task. After controlling for differences in ability and work experience, I find evidence of an effect reversal across knowledge levels: decision makers with a low level of cost accounting knowledge perform better with a graphical ABC format, and decision makers with a high level of cost knowledge obtain superior profits with a tabular ABC format. Further evidence indicates that graphical formats tend to reduce task complexity for a low-knowledge decision maker, whereas tables support the information search of a more knowledgeable user. This result provides important theoretical and practical insights, suggesting that (1) cost accounting knowledge is a crucial managerial characteristic that should be taken into account when a firm presents cost reports to a decision maker, and (2) managerial cost accounting knowledge and data representation jointly determine the direction on firm profitability. This has broad implications for the many information flows within the firm. To convey accounting data to both internal and external parties (e.g. managers, investors), an exclusive focus on one format is probably not advisable. Instead, firms can facilitate decision-making by adapting the presentation format to the level of the accounting sophistication of their intended audience.

In many firms, managers with various levels of cost accounting knowledge make cost-based decisions on the basis of accounting information systems that provide “easy-to-understand” graphical rather than tabular cost reports. Yet, the performance effects of different types of presentation formats in relation to varied levels of cost accounting knowledge have received scant attention in the literature. This study experimentally investigates these joint effects in the context of a relatively complex task that requires decision makers to make customer-specific price and resource allocation decisions that affect profitability. This study advances our understanding of managerial decision-making in several ways. First, I find that different formats influence profitability differently, with the direction of impact contingent upon the user’s level of accounting sophistication. After controlling for differences in ability and experience, I show that cost report users with a low level of cost accounting knowledge achieve higher profits when ABC data are displayed in a graphical format rather than in a tabular format. More surprisingly, the opposite is true for sophisticated users; their profits are higher given a tabular format. Second, this finding has important practical implications. There is no unique way to present cost data to managers. To extract maximum potential for improved decision-making, accounting information systems may need to adjust a cost report’s format to the user’s level of accounting sophistication. In most firms, many non-accountants make use of accounting information systems (Birnberg, 2000, Shields, 1995 and Mauldin and Ruchala, 1999). These non-accountants are better served by graphical presentations of accounting information. In contrast, accountants are likely to receive appropriate access to the data by means of traditional tables. In a broader context, with respect to the debate on how non-professional versus professional investors acquire firm-specific information (Maines & McDaniel, 2000), firms can capitalize on my findings and adjust the format of their disclosures to the level of accounting knowledge of their investors. Third, from a theoretical viewpoint, this study shows that knowledge is an important attribute that explains when particular presentation formats are likely to provide profit improvement. While most research on presentation formats has produced conflicting evidence on several aspects of the decision task (Vessey, 1991), my findings indicate that a focus on a user’s characteristics may explain part of these mixed results. I show that researchers can expect adverse performance effects when the external presentation format is not well aligned with a decision maker’s mental model or decision style. To focus on the joint effects of knowledge and presentation format, I hold the level of task complexity constant. Future research could vary task complexity (e.g. Tan and Kao, 1999 and Tan et al., 2002) and explore how the joint effects of knowledge and presentation format extend to different levels of task complexity. It might also be interesting to allow decision makers to choose their format rather than simply assigning them graphical or tabular formats, in order to study the types of decision makers who are more likely to access graphical rather than tabular representations. Other dimensions of managerial expertise (junior- versus senior-level managers) or job functions (top- versus lower-level managers) could lead to preferences for a specific type of format. Finally, a potential limitation of the study is that graphical formats did not contain all the items of the table. Nevertheless, this probably did not affect my findings because the extra items contained little extra information content for the objective of maximizing profits. Yet, some decisions, like the evaluation of division managers, involve a more subjective judgment and further studies could explore whether extra (redundant) cues do matter here. Evaluations may differ when managers have access to only a few or many metrics that are all equally informative about performance. Again, one could explore whether expertise of the evaluator matters herein. Also, the practice of presenting these metrics to evaluators strongly varies across firms. Sometimes balanced scorecards use red, yellow, and green ratings for their performance metrics (Malina & Selto, 2001). In any event, further research that links such variations in practice to a decision maker’s expertise (Sprinkle, 2003) may provide guidance for how firms can optimize the many flows of accounting information to internal and external users of that information.