An Experimental Study On Presentation Format, Level Of Knowledge And Management Accounting Decision-making

Slowing growth, restructuring economy, increasing competition and the international financial crisis imply a new era of economic development is coming. Against the background, at the double conference of this year, how to promote corporate restructuring and upgrading is the most popular topic on entrepreneurs’ mind. The key to deal with challenges and improve the inner management efficiency is to set up management accounting system.The Ministry of Finance has been made management accounting as a key point and direction of accounting reformation development. It will actively take effective actions to promote the construction of management accounting system in China. We can deduce that the development of management accounting will turn into a gusher and last for quite a long time in the future.From anchoring market to after-sales service, management accounting is rooted in every stage of the development of enterprises. It provides managers with integration and standardization of decision-making information. With the rapid development of Internet technology, making money is characterized by complexity and confidentiality.The Ministry of Finance have emphasized the importance of the value of management accounting. How to use effectively the management accounting information and maximize the decision-making value are the keys to add value to the business. There are two aspects of the decisive manager value of management accounting, which are content and format. Management accounting practice has been well-researched in the content of the decisive manager value, while it is few and far between the decisive manager value to the format aspect.Based on the famous psychological theory named Cognitive Fit Theory, this paper examines experimentally the profit impact of a management accounting report’s presentation format in relation to a decision maker’s level of accounting knowledge. Focus on the presentation format and level of decision maker’s knowledge, we put forward the conceptual model of the two presentation formats, namely table type and graph form on the basis of theoretical analysis, which influenced the decision-making. In the support of Visual Basic programming language, I chose2×2two-factor computer simulation, and invited more than100postgraduates to participate in the computer experiment. Background information on the experiment has selected 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 arrangement of the main content:Chapter Ⅰ:introduction. By analyzing the status of management accounting research, it elicits the background of this paper and introduces the importance of this study. It also describes the main research method, has set up a basic framework, gives a clear theoretical and practical contribution.Chapter Ⅱ:theory basis and literature review. It reviews the related research at home and aboard, lays a main theoretical foundation separately from the hypothesis of bounded rationality to cognitive psychology. It summarizes the related research about presentation format, knowledge level and management accounting decision making, then, put forward the possible research scopes.Chapter Ⅲ:hypothesis and experiment design. Based on the existing literature, gradually analyzed the logical relationship among the variable level of presentation format, knowledge level and management accounting decision making, then I deduces the hypothesizes. After that, it discusses the detailed experimental designing process, including experiment task design, and three stages of experiment preparation.Chapter Ⅳ:the empirical analysis of experiment. I recover experimental data and pre-process these data, and then do operating tests of experiment. Variables and experimental feedback information are analyzed with descriptive statistics. Through variance analysis and T test of independent sample, I study the joint effects of accounting knowledge and presentation format to the management accounting decision making. At last, through statistical analysis of experimental feedback information, deeply discusses the research topic once again.Chapter Ⅴ:conclusion and prospect. It summarizes the empirical result and supplementary analysis, finally summarizes the theory and practice significance. It also analyses the limitations of this experimental study based on the difficulties and problems encountered in the research process, and propose the direction of future research on management accounting decision making.Through empirical research, the main conclusions of this paper are drawn:The effect of presentation format on decision performance in a complex task depends on the level of knowledge. To improve the accuracy of decision, graph formats facilitate data retrieval and information processing of less knowledgeable decision maker. The profit performance for decision maker with high knowledge is higher given a tabular presentation format than given a graphical presentation. Because an analytical approach takes effort, a high degree of knowledge in domain is needed to engage in analytical processing. Knowledgeable decision makers search for specific details by form. In addition, the increasing of the level of knowledge can make positive efforts on decision making.The content of this research relates to management accounting has characteristics of forwardness, marginality and intersectionality in theory, which involves management accounting, decision management and behavior management and so on. This study experimentally investigates joint effects of knowledge and presentation format that affect decision accuracy and firm’s profitability. This paper will rich the number of research achievements in management accounting. It’s important in theory and practice. On the one hand, 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. On the other hand, this finding has important practical implications. To extract maximum potential for improved decision-making, management accounting information systems may need to adjust information’s format to the user’s level of accounting sophistication. Studying the joint effects of knowledge and presentation format, which affecting the management accounting decision making, is to meet the requirement of the development of management accounting.The characteristics and contributions:First, the content of research. The scope of management accounting research covers management accounting system, decision method, cost management accounting and general issues. But it ignores the decision making after the use of management accounting information. If we do not attach importance of management accounting decision making, we will not understand clearly the mechanism of management accounting report. How individual differences of the users of management accounting information act on decision-making is a study both theoretical value and practical significance. Based on behavioral decision and cognitive psychological theory, this study can fill in the blanks of management accounting research and broad the vision.Second, research method. With the development of experimental and behavioral economics, experimental methodology is introduced gradually to research accounting issues. At the stage of accounting researches, most of them are empirical normal study, archival study and case study. Experimental method is rarely used. This study is an attempt and an innovation.Third, research revelation. This study advances our understanding of managerial decision making. Different formats influence profitability and decision accuracy. The results suggest a strong relation between presentation format in relation to a decision maker’s level of accounting knowledge. Accounting knowledge is a crucial managerial characteristic that should be taken into account when a firm presents management accounting information to a decision maker. In order to improve the efficiency and the value of decision making, management accounting information systems may need to adjust a appropriate format to the user’s level of accounting knowledge.