Information Pursuit in Financial Statement Analysis: Effects of Choice, Effort, and Reconciliation

• DOI: 10.2308/accr.2007.82.3.731
• Publication Date: 2008-03-29T02:59:29Z
• Authors: Mark W. Nelson; William B. Tayler
• Keywords: Statement (logic); Financial statement; Capitalization; Constructive

Prior research provides evidence that information affects financial statement users' judgments less when is provided in a accessible format (e.g., disclosed footnote or prominent rather than being recognized on the income [Maines and McDaniel 2000]). We provide that, conditional users performing analysis necessary to transform statements appear as if had been recognized, may affect more it would have initially. Our experiments are set context of constructive capitalization operating leases. The first experiment manipulates three variables we hypothesize will contribute this effect: choice use transformed statements, effort spent transformation process, reconciliation pre- post-transformation numbers. constructive-capitalization setting operationalize, has greater effect was expended obtain displayed reconciled format. second focuses replicates with additional controls. These results implications for standard-setters who consider relative benefits recognition disclosure, part their analyses.