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The importance of colour on the
communication of financial
data in management
Kelvin Leong and Anna Sung
Chester Business School, University of Chester, Chester, UK
Taylor Williams
North Wales Business School, Glyndwr University, Wrexham, UK
Costantine Andoniou
Department of Education, College of Arts and Sciences,
Abu Dhabi University, Abu Dhabi, United Arab Emirates, and
Flora Sun
Department of Accounting, McCombs School of Business,
University of Texas, Austin, Texas, USA
Abstract
Purpose –The purpose of this paper is to explore the importance of colour on the communication of financial
data in management and to encourage future discussion on related topic.
Design/methodology/approach –Hypothesis was designed building on relevant literatures. Quantitative
discrete data were collected through a mini-test activity in a lecture from students. The results were reviewed
and evaluated by relevant statistical tool.
Findings –The authors found consistent statistical significance results in the mini-test. The findings support
that users prefer to choose the financial data presented in cool colours in business management context.
Research limitations/implications –Gaining the understanding of colour’s influence on decision making
and behaviour is subjected to complexity. There are many other contextual factors should be taken into
consideration in practice. Although the design of the mini-test in this study is relatively simple, it still
provides clues for the issue. With the discussions and findings of this paper, the authors shed some light on
the direction of potential uses of colour on the communication of financial data in management context. The
findings could also be used by management educators to facilitate related discussions among students
regarding the complexity of business communication and the importance of perception in decision making.
For example, decision making could be affected by various factors (such as colour) outside verbal and text.
Originality/value –Managers often need to use financial data in communication for various purposes in
work place. The authors believe this is the first time that a study like this had been conducted to specifically
review and discuss the importance of colour on the communication of financial data in management.
Hopefully, the work reported in this paper could be viewed as reference for management educators,
researchers and managers in future research or practical applications on related topics.
Keywords Perception, Communication, Management, Decision making, Colour, Financial data
Paper type Research paper
1. Introduction
Managers often need to use financial data in communication for various purposes
in work place. For examples, providing sales target to the team, explaining bonus scheme to
incentive employees or discussing budget figures with subordinates, etc. Therefore, effective
Journal of Work-Applied
Management
Vol. 11 No. 1, 2019
pp. 92-100
Emerald Publishing Limited
2205-2062
DOI 10.1108/JWAM-06-2019-0013
Received 3 June 2019
Revised 10 June 2019
Accepted 11 June 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2205-2062.htm
© Kelvin Leong, Anna Sung, Taylor Williams, Costantine Andoniou and Flora Sun. Published in
Journal of Work-Applied Management. Published by Emerald Publishing Limited. This article is published
under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate
and create derivative works of this article (for both commercial and non-commercial purposes), subject to
full attribution to the original publication and authors. The full terms of this licence may be seen at
http://creativecommons.org/licences/by/4.0/legalcode
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communication of financial data is the key for managers to get work done with and
through people.
There are many ways for managers to achieve better communication, such as using story
telling approach to boost engagement and well-being (Wall and Rossetti, 2013), changing the
tone of words in financial reports to affect investor decisions (e.g. Huang et al., 2013).
This paper aims to explore the importance of colour on the communication of financial
data in management and to encourage future discussions. In fact, previous studies have
discussed the correlations between colours and user’s perceptions on different things. For
instance, in the study of Bayarri et al. (2001), researchers discovered the influence of colour
on perception of sweetness and fruit flavour of fruit drinks. Therefore, it would be
interesting to see if managers can use colour to make finance data “sweeter”in work place.
Moreover, this paper could also be used by management educators to facilitate related
discussions among students regarding the complexity of business communication and the
importance of perception in decision making.
The rest of the paper is organized as follows. In Section 2, we reflect the role of financial
data in management by reviewing and summarizing related literatures. Building on the
literatures, Section 3 discusses the relationship between the use of colour and user
preference on choosing financial data. Moreover, this section summarizes the development
of proposed hypothesis and introduces a mini-test that was used for testing the hypothesis.
The results of mini-test are then reported in Section 4. Section 5 provides discussions and
recommendations for future works.
2. The role of financial data in management
This section reflects the role of financial data in management by reviewing and
summarizing related literatures. The reflection serves as a foundation for this study.
There are many ways to define management. When “what is management”was typed
into Google (as at 30 May 2019 at 11.43 a.m., UK time), it returned 6,820,000,000 results.
In this work, we define “management”as:
A set of human activities happens in work place led by economic goals.
This definition is developed based on following literatures. First, as per Garrison et al. (2017),
management works involve three major human activities (i.e. planning, direction and motivating
and controlling). Second, “management happens in work place”because the term “management”
often associate with work and employment (Hendry, 2013). Third, “management”should
beledbyeconomicgoals’, this is because, as per Drucker (2011), “Management must always, in
every decision and action, put economic performance first”. In addition, it is also worth noting
that economic goals are often presented in the form of financial data in work place,
such as target sales, gross margin, bonus, costs, return on investment, payback period, and
many others, etc.
Human activities can also be understood as product of human behaviour. On this, there
are two classical theories that can be used to explain how data affect human behaviour. The
first one is Simon’s (1959) model of decision making, it explains human’s decision making
involves three stages: intelligence, which deals with the problem identification and the data
collection on the problem; design, which deals with the generation of alternative solutions to
the problem at hand; and choice, which is selecting the “best”solution from amongst the
alternative solutions using some criterion.
Rational choice theory (Downs, 1957) can be used to explain how users select the “best
solution”in the third stage of the Simon’s model of decision. Rational choice theory is a well-
established framework for understanding (and modelling) human behaviour. The basic
assumptions of the rational choice theory are humans are goal oriented and humans make
decision based on rational calculations.
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Figure 1 summarizes the above discussions. Given economic goals are often presented
in the form of financial data in work place; data would affects human behaviour; human
behaviour produces human activities; and (iv) human activities are a key component in
management, it forms a link between financial data and management.
In practical term, the link between financial data and management is communication. This
is because users’decision would be affected by what data they received during communication
and then their behaviour (or actions) will be changed accordingly as well. For example, very
often a sales manager would use sales commission to motivate salespeople to work towards
predefined targets, but it also depends on how the salespeople understand the sales commission
package and the understanding would affect how much effort they are willing to put in.
However, how to communicate financial data effectively has long been a practical
challenge, in particular we are now living in the age of the big data. In brief, a key challenge
of financial data communication is that we have too much data. An interesting figure was
found as at 30 May 2019 from www.physics.org/; it suggests that “It would take around
three million years to download all the information currently on the internet, assuming a
download speed of 44 megabits per second”. This is a foreseeable trend that the volume of
data will keep increasing because of the development of Internet of Things and Financial
Technology (Leong and Sung, 2018).
An impact of increasing among of data around us is the decrease of our attention span.
Music industry shows an example on how our attention span is decreasing. As per Gauvin
(2017), the average time that passed before audience would hear the vocals on any radio
song was 23 s, today the average intro is just 5 s long.
Poor attention would negatively affect decision-making quality and then unintended
behaviour. In order to improve user’s attention span during communicating financial
data in management, data visualization is a possible way, this is because human brain
processes image 60,000 times faster than text (Vogel et al., 1986). Among other sub-topics
under data visualization field, the focus of this study is regarding the use of colour in
financial data communication.
Presented as Affects
Led by
Forms
Produces
Leads to
Supports
Economic
goals
Management
Activities
Behaviour
Decision
making
Rational
choice
Financial data
Figure 1.
The link between
financial data and
management
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3. Use of colour and user preference on choosing financial data
Colour plays a key role in user’s decision-making process. Scientist and researchers have
long studied the relationship between colour and human behaviour. As far back as 1810,
Goethe published his Theory of Colors that he linked colour categories to emotional
responds (Schindler and Goethe, 1970).
In past decades, some related studies are as follows. Birren (2013) provided a systematic
discussion on linking how humans perceive colours to how it makes them react. Neurobiologists
(Livingstone and Hubel, 1988; Livingstone and Hubel, 2008) explained how human visual
system deal with different wavelengths of light and how colour affect perception. The works of
Hemphill (1996) and Mahnke (1996) suggested the strong correlations between colours with
human emotions and feelings. Aslam (2006) found that colour induces moods and emotions,
influences consumers’perceptions and behaviour. Elliot et al. (2009) indicated that colour can be
used to subconsciously influence people’s behaviours and motivations. Valdez and Mehrabian
(1994) concluded that people experienced the greatest pleasure from seeing bright, saturated
colours. Singh (2006) suggested that “people make up their minds within 90 s of their initial
interactions with either people or products, with about 62–90 per cent of the assessment is
based on colours alone”. Kress and Leeuwen (2002) found that adding colour to documents can
increase the reader’s attention by more than 80 per cent. Also, if the amount of money on an
invoice is presented in a colour as opposed to a mono-colour, the amount is 30 per cent more
likely to be paid on time. In addition, by studying a survey of 100 Hong Kong annual reports,
Courtis(2004)foundthereweresomecolourshaspositiveeffectsonperceptionformationand
investment allocations. So and Smith (2002) reported the results of a laboratory experiment and
found colour graphics improve decision making.
There are many different colours in the world, one of the widely adopted approaches is to
classify the colours into cool colours or warm colours according to the hue angles. In brief,
red, yellow and orange hue angles are considered to be warm colours, on the other hand,
blue, purple and green hue angles are referred to as cool colours (Luo et al., 2004). Previous
study (Lee et al., 2011) suggested that cool colours are perceived to encourage positive
emotions, whereas warm colours tend to inflict and associate to negative emotions.
We, therefore, hypothesize:
H1. Users would prefer to choose the financial data presented in cool colour than warm
colour in business management context.
In order to evaluate the proposed H1, a mini-test was designed and arranged as follows.
As per the Appendix, the mini-test contains only three questions and each question is related
to a business management situation. For each pair of the options (i.e. answers) in the questions,
there is one option presented in cool colour, whileanotheroptionpresentedinwarmcolour.
We used Kahoot (https://kahoot.com/) to conduct the mini-test in a lecture for Level 4
( first year undergraduate) business students and majority of them are not major in
accounting and finance. Students were asked to answer the questions independently using
their own mobile devices.
The “Kahoot”is a game-based learning platform supporting multiple-choice quizzes.
The gameplay of this mini-test is simple; all participants connected using a generated
game PIN shown on the common screen, and used their own device to answer each
questions simultaneously. The corresponding statistics of responses were recorded
manually immediately after completion of each question by the researcher.
Although the design of the mini-test is relatively simple, it still provides clues for the
issue. The results of the mini-test are reported as follows.
4. The results of the mini-test
Corresponding statistics of responses for the questions are shown below.
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In total, 44 students were in the lecture, but not all students participated the mini-test.
Moreover, as per Figure 2, the total number of responses are different in the three questions:
it indicates that for those students who participated in the mini-test, some of them answered
all the three questions, while some of them answered one or two questions only. This was an
anonymous mini-test and we do not know who answered which questions.
Overall, as per Figure 2, the results of the mini-test show that participants preferred
financial data presented in comparatively cool colours rather than financial data presented
in comparatively warm colours. Moreover, these patterns are consistently found across the
three questions.
Recall that in the H1, we proposed “Users would prefer to choose the financial data
presented in cool colour than presented in warm colour in management context”. We then
suggested the null hypothesis (i.e. the expectation) as the opposite situation, that is:
H
0
.Users would have no preference on choosing the financial data presented in cool
colour or warm colour in business management context.
In this study, given discrete data (i.e. frequencies of option A or B in each question) were
collected and our goal was to determine whether or not there was a significant difference
between the observed frequencies and the expected frequencies for each question.
Therefore, χ
2
test instead of t-test or alike was selected and applied as the statistical test in
this study. The observed frequencies and expected frequencies were obtained as follows:
•the observed frequencies were obtained from the mini-test; and
•the expected frequency of the answer at each question was based on H
0
, that is,
there are 50:50 chance that a participant would choose cool colour or warm colour
(i.e. no preference).
According to the χ
2
test results, as presented in Table I, we found statistical significance
results (Q1 ( χ
2
¼10.3143, po0.01), Q2 ( χ
2
¼5.4444, po0.05) and Q3 ( χ
2
¼6.8182,po0.01),
df ¼1). Therefore, H
0
for Q1–Q3 should be rejected. These results support that users prefer to
choose the financial data presented in cool colour in business management context.
5. Discussion and recommendations for future works
According to the mini-test results, users preferred to choose an item with financial data
presented in comparatively cool colour and the results of the pattern are consistent across
the three questions.
With the findings from the mini-test, we shed some light on the direction of potential uses
of colour on the communication of financial data in management. For examples, if a
manager wants to motivate his/her team to work harder in next week by introducing a
Q1
8
23%
27
77%
Answer Choices Responses Answer Choices Answer Choices
in %
77
23
27
8
35
Count
Responses
in %
31
69
30
30
11
25
36
Count
Responses
in %
27
73
9
24
33
Count
Total
8m
8m
Total Total
6m
6m
Q2
11
31%
25
69%
Q3
9
27%
24
73% 30%
30%
8m
8m
6m
6m
Figure 2.
Summary of
corresponding
statistics of responses
in Q1–Q3
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bonus scheme, the manager may consider to use cool colour to present the bonus figure in
order to make a good first impression. Other than this, a finance controller may use warm
colours to present cost budget to department heads in order to discourage using money.
Moreover, this paper could also be used by management educators in various ways.
For examples, the findings could inform business communication education, not limited to
finance data presentation, but also on other business-related topics. The findings could also
be used in class discussion about potential relationships between psychological factors and
perception during management communications. Moreover, lecturers could also consider
altering the mini-test questions in this paper in other business contexts to facilitate students
to reflect how different factors in communications could affect business decision making.
However, it is worthy to note that gaining the understanding of the colour’s influence on
decision making and behaviour is subjected to complexity, as individuals form personal
associations and preferences to colour based on their own culture and personalities
(Grossman and Wisenblit, 1999). Taken red colour as an example, such association between
red and risk may be seen as a view from a western culture, whereas, the colour red holds an
opposing meaning within the Chinese culture; red is considered as a connotation for positive
feelings; joyous, happiness and good luck (He, 2009). Another example is the blue colour,
blue encourages feelings of relaxed, calm and comfort. Kaya and Epps (2004) found that the
mood created by the colour blue is explained and induced by the strong association with the
calming elements of nature such as water, the ocean and the sky.
Furthermore, previous studies also suggested that there is a difference in the preference
and perceptions of colours between genders. Khouw (2002) suggested that males seemed
more tolerant of grey, white or black in comparison to females, and also, women reacted
more frequently to the combination of red and blue colours. It is also suggested that a
person’s age can impact on how colour is perceived. On the other hand, young age
individuals are attracted by warm and strong colours, and as the individual’s age increases,
the attractiveness of warm, strong colours decreases. Instead, subdued colours become more
attractive (De Bortoli and Maroto, 2001). Moreover, in many different languages, in a non-
literal way, the word red refers to dangerous situations to be avoided. In the finance and
investment domain, such phrases include “in the red”to describe financial losses and “red
flags”as a warning sign (Bazley et al., 2016). Therefore, in financial communication, red may
lead to pessimistic perceptions, which in turn, low risk taking behaviours would be seen
Observed Expected χ
2
component
Categories O
i
E
i
(O
i
−E
i
)
2
/E
i
Q1
8m (blue –cool) 27 17.5 5.1571
8m (yellow –warm) 8 17.5 5.1571
Total 35 35 10.3143
p-value 0.00132
Q2
6m (orange –warm) 11 18 2.7222
6m (grey –neutral) 25 18 2.7222
Total 36 36 5.4444
p-value 0.019631
Q3
30% (dark red –warm) 9 16.5 3.4091
30% (purple –less cool) 24 16.5 3.4091
Total 33 33 6.8182
p-value 0.009023
Table I.
χ
2
test results
of Q1–Q3
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as a reflection. This is confirmed by Gnambs et al. (2015), whose study identified that the
application of the colour red led to conservative choices and low risk decisions, whereas the
application of grey and blue colours encouraged risk taking behaviours and decisions.
In sum, there are many other contextual factors should be taken into consideration in
practice when deciding what colour should be used to present financial data in management
communication. Nevertheless, we believe this is the first time that a study like this had been
conducted to specifically review and discuss the importance of colour on the communication
of financial data in management. Hopefully, the work reported in this paper could be viewed
as reference for management educators, researchers and managers in future research or
practical applications on related topic.
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Appendix. The three question in the mini-test
Corresponding author
Kelvin Leong can be contacted at: k.leong@chester.ac.uk
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