Decision Aid Reliance: A Longitudinal Field Study Involving Professional Buy-Side Financial Analysts
Abbreviated Journal Title
Contemp. Account. Res.
Decision aid reliance; Financial analysts; Forecast accuracy; JUDGMENT PERFORMANCE; INCENTIVES; JUSTIFICATION; INFORMATION; MOTIVATION; KNOWLEDGE; SETTINGS; PRESSURE; AUDITOR; TRUST; Business, Finance
This study complements and extends prior decision aid (DA) research by examining the DA reliance behavior of professional buy-side financial analysts in the context of their actual work environment. A large mutual fund company provided data on buy-side analysts' earnings forecasts over the course of one year, during which forecasts were made at the end of each quarter for the following four consecutive quarters. As part of the decision process, all analysts could voluntarily access a DA to assist them in forecasting earnings. Consistent with extant DA theory, the results indicate that analysts with greater performance-contingent incentives were less likely to rely on the DA and analysts with more complex portfolios were more likely to rely on the DA. Contrary to the results of most DA research and inconsistent with extant DA theory, analysts with greater task ability relied more on the DA than analysts with lesser ability. Finally, when DA reliance was high, analysts' forecast accuracy was also high, regardless of DA accuracy. The results provide valuable insight into the use of DAs by professional decision makers and the influence of DA reliance on their judgments in light of real-world pressures and performance consequences. The theoretical and practical implications of this study call for more research into why, how, and under what conditions highly skilled knowledge workers rely on the advice of DAs.
Contemporary Accounting Research
"Decision Aid Reliance: A Longitudinal Field Study Involving Professional Buy-Side Financial Analysts" (2010). Faculty Bibliography 2010s. 282.