Experimental tests of the salience theory: disaggregated income statements under two economic states

Yao Guo and Jianan Zhou

Asia-Pacific Journal of Accounting & Economics, 2018, vol. 25, issue 1-2, 113-127

Abstract: We present experimental evidence that unsophisticated investors are better able to make judgments when operating expenses are disaggregated by nature. Disaggregated expenses on the face of income statements increase the salience of information about cost structures and operating leverages that usually disclosed in several parts of the financial statements and notes. The judgments are also affected by economic states. We infer that disaggregation contributes more on making judgments in economic expansion rather than in economic recession. Our results bring empirical evidence to joint FASB/IASB financial statement presentation project and standard setters to encourage consistent principles for the presentation format in financial statements between Chinese GAAP and IFRS.

Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2016.1266269 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:raaexx:v:25:y:2018:i:1-2:p:113-127

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2016.1266269

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().