The effects of encoded memory traces for numerical data on accounting decision making

Abstract

In a previous issue of this journal, we proposed a model that concerns the encoding and retrieval of numerical data by accounting decision makers (Kida, T. & Smith, J. (1995). We argued in the model that decision makers will be better able to retrieve affective reactions to numerical data from memory structures as compared to other forms of encoded representations and that, as a consequence, affective reactions will significantly impact future data recall and decision making. This paper empirically examines these key propositions of the model. Three studies were conducted that investigate the memory retrievals and decisions of experienced managers in stock investment and financial difficulty contexts. The results are consistent with our expectations, pointing to the importance of considering affective reactions when attempting to better understand encoding, retrieval and decision making with accounting data.