This study examines whether cooperative learning can improve the learning outcomes of students in a passive learning environment. One hundred seventy-two accounting students who were attending a major Hong Kong university participated in this study. Using a 2 × 2 between-subjects experimental design, this study finds that students who were taught using a cooperative learning approach significantly outperformed those who were taught using a traditional lecture format. Moreover, the results of this study indicate that the students in cooperative learning sessions performed significantly better in answering indirect application-type questions than those in traditional lecture sessions. Overall, the results of this experiment suggest that cooperative learning is an effective teaching pedagogy for delivering accounting topics in a passive learning environment. The implications of this study for accounting education and the directions for future research are also discussed.

This study replicates Hwang et al. (2005) with a different cohort of accounting majors. This study also extends Hwang et al.'s (2005) article by exploring the effectiveness of employing cooperative learning pedagogy to enhance students' learning outcomes at both the application level and analysis level of knowledge (Bloom 1956). Different from the original paper, this study evaluates participants' learning outcomes using cases with supporting calculations, instead of multiple-choice questions. Overall, this study finds that cooperative learning is a more effective pedagogy than traditional lecture for students who were raised and educated in a passive learning environment. Limitations and possible directions for future research are also discussed.

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This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting in Hong Kong. Employing a survey instrument, we asked bank loan officers to rank the importance of thirty‐five reporting dimensions for lending decisions and to ascertain their expected level of information on each exploratory dimension, as well as their perceptions of the level of information actually provided by audited financial statements. Reliance on principal‐component analysis to extract a set of important dimensions shows that nine reporting dimensions are significantly associated with lending decisions. When bank loan officers' levels of expectations on important reporting dimensions were compared with the corresponding levels of perceived reporting performance, the statistical results reflect the existence of an expectations‐performance gap. Finally, when bank loan officers' perceived levels of reporting performance were hierarchically positioned, audited financial statements were found to provide the most information on a firm's liquidity and profitability, moderate information on reliability‐related dimensions, and the least information on relevance‐related dimensions pertaining to the future prospects of a firm. This empirical evidence signifies the need for future corrective actions in closing the expectations‐performance gap.