The effect of information cost, source reliability, and individuating information on the perceived usefulness of summary information: A study in management accounting

The problem addressed by this research involves the manner in which managerial decision makers use management accounting information (presented in summary form) when combined with information gathered from other, individuating, sources. While prior research suggests that individuals do not work well with information presented in summary form, this study suggests that natural factors exist in the business environment which enrich the context in which summary information is perceived. Two such factors are addressed in this research: information cost and source reliability. The specific issue addressed by this study is whether the knowledge of the cost or source reliability of summary information will increase the perceived usefulness of summary information and reduce the preference for irrelevant or redundant individuating information.;The results indicate that the findings of past research can be duplicated in a management accounting context given a neutral setting (i.e. when no information is provided about the source of the summary information). Further, this study has shown that, overall, the differences typically observed between the presentation of summary information alone and the presentation of summary information along with individuating information can be reduced by enriching the context of the summary information (i.e. by providing additional commentary about the summary information).;While a statistically significant difference was observed only between levels of reliability in the summary condition of Experiment Two (summary information with additional commentary), both the estimates obtained in the high cost and high reliability conditions when a combination of information was provided (Experiment Two) were significantly greater than the estimates obtained in the neutral combination condition (Experiment One). While the precise effects of the levels of information cost and source reliability are not clear, given these results, it is safe to say that enriching the context of the summary information did serve to draw attention to that information and away from the typically dominant individuating information.