Managing impressions using distorted graphs of income and earnings per share: The role of memory

Robin Pennington and Brad Tuttle

International Journal of Accounting Information Systems, 2009, vol. 10, issue 1, 25-45

Abstract: This study investigates the role that memory plays in interpreting and using distorted graphs that mislead the user of the financial information. It draws upon the literatures concerning memory, impression management and effective graph design. In order to examine whether reliance on memory for distorted graphs leads to different impressions of the data, we conduct an experiment in which we manipulate the type of graph distortion and whether memory of the graph is required by the decision. We present evidence that individuals receiving misleading graphs are more likely to misinterpret underlying data trends and that memory moderates the effect depending upon the type of distortion used to mislead the individual. The resulting data interpretation errors lead to more positive judgments and investment decisions than would otherwise be warranted. Thus our findings suggest that graph distortions mislead users into incorrect conclusions about the underlying data and that these interpretation errors persist in memory and affect judgments and investment decisions. We extend the prior literature, which has not considered the direct effects of graph interpretation or the effects of memory, and provide a baseline for investigating the effects of memory on impression management.

Keywords: Graphs; Impression management; Memory; Judgment; Decision making (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1467089508000547
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ijoais:v:10:y:2009:i:1:p:25-45

DOI: 10.1016/j.accinf.2008.10.001

Access Statistics for this article

International Journal of Accounting Information Systems is currently edited by S.V. Grabski

More articles in International Journal of Accounting Information Systems from Elsevier
Bibliographic data for series maintained by Catherine Liu ().