Abstract:ABSTRACT:We investigate a key assumption underlying much of the experimental research in financial accounting that graduate business students are a good proxy for nonprofessional investors. To conduct our investigation, we categorize recent experimental studies in financial accounting, based on the relative level of integrative complexity inherent in each study's task. We then conduct experiments using two tasks, one that is relatively low in integrative complexity and one that is relatively high in integrativ… Show more
“…For our task, low integrative and not an investment decision, Elliott et al (2007) finds that MBA students' judgments are consistent with judgments of other non-professional investors. Still, it is possible that our participants are not representative of all non-professional investors and our sample is not representative of more sophisticated investors, such as institutional investors or financial analysts.…”
“…For our task, low integrative and not an investment decision, Elliott et al (2007) finds that MBA students' judgments are consistent with judgments of other non-professional investors. Still, it is possible that our participants are not representative of all non-professional investors and our sample is not representative of more sophisticated investors, such as institutional investors or financial analysts.…”
“…It is possible that these participants systematically differ from the broader class of non-professional investors on judgment relevant dimensions, and that the results may not generalize to this class of investors. However, recent findings from Elliott et al (2007) suggest that graduate business students similar to those used in the current study represent reasonable proxies for nonprofessional investors. Second, brief scenarios were used to characterize 16 hypothetical organizational responses to an accounting restatement.…”
Section: Discussionmentioning
confidence: 60%
“…See Section 303A.00 Corporate Governance Standards at http://www.nyse.com/Frameset.html?display Page=/lcm/1078416930900.html?archive=no 4 For completing the study, participants received extra credit in the course. 5 Note that recent research (Elliott et al, 2007) suggests that using graduate business students as a proxy for non-professional investors is valid when the experimental task (i.e., investment related decisions) is aligned with the participantsÕ education level and work experiment (i.e., work experiment greater than 5 years). 6 To ensure saliency of the manipulation, at the end of the experiment participants were asked to describe the reason for AMEÕs restatement on a scale of 0 (somewhat aggressive accounting) to 10 (fraudulent financial reporting).…”
“…Moreover, each of these studies clearly demonstrates that such students recognize and are sensitive to accounting information differences. Additionally, Elliott et al (2007) find that MBA students with greater than five years of work experience are generally good proxies for investors. As stated later in the paper, controlling for the difference in the level of experience does not impact our results or the conclusions drawn.…”
Section: Designmentioning
confidence: 90%
“…None of these variables is significant, and therefore, are not included in the primary analysis. In addition, the results from Elliott et al (2007) suggest that using graduate business students as a proxy for investors is valid, but researchers should carefully align experimental tasks with the appropriate educational level and/or work experience. They show that MBA students with significant work experience (i.e., >5 years) do not perform significantly different from investors when making an investmentrelated judgment/decision.…”
Section: Descriptive Statistics and Correlation Matrixmentioning
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