Assuring Information Relevance: The Effects of Management Accounting Experience and Problem Information Content

Abstract

As information advisors, Certified Public Accountants (CPAs) can be viewed as information quality assurers who independently improve the relevance of information for decision-makers. Relevance improvement advice may depend on the advisor's background as well as the problem information content of the initial decision problem presentation. This study reports results of an experiment in which accountants with various levels of management accounting experience received materials with problem information content based on either historical net income or historical cash flow data. Results indicate that relative managerial accounting experience significantly increases experienced accountants' tendencies to incorporate decision-relevant opportunity cost information in their recommendations. Furthermore, problem information content significantly affects accountants' choice of method for analyzing information for a decision which, in turn, affects their selection of relevant information as the basis for their recommendations.

JEL Classification: M40, M46, C91