Research-Thesis: How do firms use work-in progress financial information, and does it influence their decision-making?

Abstract

This thesis investigates how firms use work-in-progress (WIP) financial information in their managerial decision-making processes. WIP financial information refers to preliminary intra-period data generated from accounting or ERP systems before all closing entries, accruals, and period-end adjustments have been completed. As digital accounting technologies make such figures increasingly available, the question of how managers actually perceive, trust, and act on them has become practically important yet remains insufficiently studied.

To address this gap, eight semi-structured interviews were conducted with senior managers and financial decision-makers in industrial firms located in the German-speaking region of eastern Belgium. The empirical analysis focuses specifically on profitability as the central dimension of WIP information use.

The findings reveal considerable variation across firms, shaped by the nature of their business model, the sophistication of their systems, and the proximity of their managers to operations. Three original contributions emerge from the analysis. First, trust in intermediate financial figures is not primarily a function of data quality but is constructed through personal ownership and familiarity with the production process. Second, the intensity with which firms rely on WIP information is dynamic rather than fixed, shifting in response to financial pressure and organisational circumstances. Third, the mode of use, meaning whether monitoring or direct decision input is systematically shaped by the manager's organisational distance from operations rather than by individual preference alone.

Across all eight firms, one finding holds with absolute consistency: human judgment remains the primary force shaping managerial decisions, regardless of the sophistication of the financial systems available. Financial information supports and informs that judgment but does not replace it.