THE INFLUENCE OF BUDGET RELATED PERFORMANCE EVALUATION MEASURES ON DECISION MAKING BEHAVIOR UNDER UNCERTAINTY (ACCOUNTING INFORMATION SYSTEM)

This is an empirical study which examined the relationship between budget related performance evaluation measures (PEMs) and decision making behavior under uncertainty. In spite of top management's preference for goal congruent decision making, few studies in the existing management accounting literature have focused on how accounting based information effects decision making behavior. The hypotheses tested in this study evolved from conceptual models of goal congruent decision making under uncertainty. Cardinal Utility Theory (CUT) provided the framework for the decision making models proposed in those studies. In this study, a decision model is presented which explicitly considered what effect the interaction of (1) a class of budget related PEMs, (2) the level of environmental uncertainty, and (3) individual risk taking propensity have on decision making behavior.; The findings indicated that the level of uncertainty in the decision making environment materially affected the subjects' decision making behavior. The repeated measures experimental design increased the threat of a negative (undesirable) outcome between sessions. The subjects behaved differently dependent upon how they were classified as risk takers (low, medium, high) and the PEM they faced. Particularly, those subjects classified as high risk averters exhibited the more contrasting behavior. The subjects were ninety-six accounting and/or finance majors. This study also includes practitioners' perspectives reinforcing the relevance of the research question within industrial settings.