Managers’ presentation preferences for aggregation: the role of internal reporting outcome, purpose, and Machiavellianism

ABSTRACT We focus on a flexible internal reporting setting and conduct an experiment to examine profit centre managers’ presentation preferences for aggregation when reporting performance-target deviations to superiors. Managers can use the internal reporting flexibility as an informational tactic to manage superiors’ perceptions of managers’ performance in ways that are consistent with mental accounting predictions. We examine if profit centre managers’ presentation preferences for aggregation depend on the internal reporting outcome and purpose as well as their level of Machiavellianism. Results show that profit centre managers’ presentation preferences for aggregation when reporting mixed outcomes are consistent with mental accounting predictions. We also find that profit centre managers’ use of impression management strategies is consistent with mental accounting predictions when the internal reporting purpose is for target revision and when high Machiavellians are reporting a mixed gain. Our results have implications for organisations in their decision to include stronger and more formalised control and governance mechanisms in order to inhibit profit centre managers’ use of internal report to influence superiors’ perceptions.