Quantification and Persuasion in Managerial Judgment

Abstract

Accounting involves assigning numbers to events - quantifying them. Conventional wisdom holds that putting numbers to an argument enhances its persuasive power. However, little scholarly evidence exists to support or refute this claim, in accounting or elsewhere. In this paper, we develop an original process-based model of how quantification influences persuasion. We posit that including a high-quality quantified analysis in a proposal enhances its persuasive power by increasing both the perceived competence of the proposal preparer and the perceived plausibility that a favorable outcome could occur. However, under some conditions, quantification also encourages criticism of the details of the proposal, which potentially offsets these effects. We experimentally test implications of our model in a managerial decision setting, investigating conditions in which quantification is more and less likely to result in criticism of the quantified proposal and, thus, less and more likely to be persuasive. We also test the model, itself, using structural equations methods. Results largely support the model, which should prove of value to researchers interested in the effects of quantification on judgments and to those interested in persuasion.

Keywords: Quantification, accounting, persuasion, measurement

JEL Classification: M41, M46, M52