The Use of Forecast Accuracy Indicators to Improve Planning Quality: Insights from a Case Study

European Accounting Review, Forthcoming

39 Pages Posted: 8 Mar 2019

See all articles by Silvia Jordan

Silvia Jordan

University of Innsbruck

Martin Messner

University of Innsbruck

Date Written: February 18, 2019

Abstract

Accounting studies have analyzed rolling forecasts and similar dynamic approaches to planning as a way to improve the quality of planning. We complement this research by investigating an alternative (complementary) way to improve planning quality, i.e., the use of forecast accuracy indicators as a results control mechanism. Our study particularly explores the practical challenges that might emerge when firms use a performance measure for forecast accuracy. We examine such challenges by means of an in-depth case study of a manufacturing firm that started to monitor sales forecast accuracy. Drawing from interviews, meeting observations and written documentation, we highlight two possible concerns with the use of forecast accuracy: concerns related to the limited degree of controllability of the performance measure and concerns with its goal congruence. We illustrate how organizational actors experienced these challenges and how they adapted their approach to forecast accuracy in response to them. Our empirical observations do not only shed light on the possibilities and challenges pertaining to the use of forecast accuracy as a performance measure; they also improve our understanding of how specific qualities of performance measures apply to ‘truth-inducing’ indicators, and how the particular organizational and market context can shape the quality of performance measures more generally.

Keywords: forecasting, accuracy, planning, budgeting, controllability, goal congruence

JEL Classification: M41, M11

Suggested Citation

Jordan, Silvia and Messner, Martin, The Use of Forecast Accuracy Indicators to Improve Planning Quality: Insights from a Case Study (February 18, 2019). European Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3336365 or http://dx.doi.org/10.2139/ssrn.3336365

Silvia Jordan

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Martin Messner (Contact Author)

University of Innsbruck ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
82
Abstract Views
1,507
Rank
543,153
PlumX Metrics