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Measurements of mislead threshold of company graph distortion

Author

Listed:
  • Shaio Yan Huang

    (National Chung Cheng University)

  • Tung-Hsien Wu

    (Feng Chia University)

  • An-An Chiu

    (National Chung Cheng University)

  • David C. Yen

    (SUNY College at Oneonta)

Abstract

Graphical information has been widely used in businesses and organizations to display, report and analyze financial information. If the graphical information is inadequately manipulated and employed like the distorted graphs, it may well mislead peoples’ judgment and hence lead their company/organization into a disaster. The study of Mather et al. (Accounting and Business Research 35(2), 147-159, 2005) shows that the graphical distortion of bar chart can be measured by using the relative graph discrepancy index (RGD). The purpose of this research is to find out what level of measurement distortion will mislead users by conducting an experimental study. Research results show that financial graphs tend to mislead users when they are distorted by over ±5 % of the RGD. This threshold should be employed as a means for auditing the related graph distortions.

Suggested Citation

  • Shaio Yan Huang & Tung-Hsien Wu & An-An Chiu & David C. Yen, 2015. "Measurements of mislead threshold of company graph distortion," Information Systems Frontiers, Springer, vol. 17(5), pages 1111-1132, October.
    • Handle: RePEc:spr:infosf:v:17:y:2015:i:5:d:10.1007_s10796-014-9486-5
    DOI: 10.1007/s10796-014-9486-5
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    References listed on IDEAS

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    1. Jones, Michael John, 2011. "The nature, use and impression management of graphs in social and environmental accounting," Accounting forum, Elsevier, vol. 35(2), pages 75-89.
    2. Jayne Godfrey & Paul Mather & Alan Ramsay, 2003. "Earnings and Impression Management in Financial Reports: The Case of CEO Changes," Abacus, Accounting Foundation, University of Sydney, vol. 39(1), pages 95-123, February.
    3. Michael John Jones, 2011. "The nature, use and impression management of graphs in social and environmental accounting," Accounting Forum, Taylor & Francis Journals, vol. 35(2), pages 75-89, June.
    4. Dineli Mather & Paul Mather & Alan Ramsay, 2005. "An investigation into the measurement of graph distortion in financial reports," Accounting and Business Research, Taylor & Francis Journals, vol. 35(2), pages 147-160.
    5. Beattie, Vivien & Jones, Michael John, 2001. "A six-country comparison of the use of graphs in annual reports," The International Journal of Accounting, Elsevier, vol. 36(2), pages 195-222, May.
    6. Giuseppe Ianniello, 2009. "The use of graphs in annual reports of major Italian companies," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 5(4), pages 442-462.
    7. Flora Muiño & Marco Trombetta, 2009. "Does graph disclosure bias reduce the cost of equity capital?," Accounting and Business Research, Taylor & Francis Journals, vol. 39(2), pages 83-102.
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