Debit Credit Framing Effect in the Investment Alocation Decision

Abstract

This study aims to test the effect of accounting information in the investment decision if information is framed in debit or INTRODUCTIONAccounting information is important for the managers and other stakeholders in the decisions proces. However, there is posibility that the decicion makers only watch the exibished financial information without consider the full meaning of accounting information based on its sources and alocations. Moreover, if the information provided has been framed for the information provider interest. Tvesrsky & Kahneman (1981) said that framing effect make the change of individual preferences when the same case is framed by different way. Framing effect has been widely studied in the decicion making, the prospect theory (Kahneman & Tversky, 1979) then be the most theory to explain the framing effect. Prospect theory is the result of the critize to the utility theory. But in the growed time, the fuzzy-trace theory also indicated has the power to explain framing effect in the accounting context (Chang et al. 2002;Arifin 2003).In the former study framing-effect likely tested in the form of positive or negative information that imply the existence of a profit or loss, but aren't specifically to compare the information based on debit and credit in the accounting. This study attempts to develop or formulate the framing instrument that essenced in accounting debit credit concept. Incompleteness debit and credit information as an example can be found likely informing the increasing assets (debit) but didn't inform that the increasing was due to an increase in the debt or equity (credit).This study tries to find what is the framing effect if information give only one side debit or credit. The focus study is the effect of framing in the portfolio investment decision. The accounting knows that the transaction has two impact on debit and credit. Debit is the alocation and credit is the source. Incompletness information make miss perception in the judgment process. So, this study will test the effect of framing in the information of asset vs liabilites, asset vs equity, asset vs revenue, and expense vs revenue.The assumption of this this study are (1) repondents haven't have the understanding of framing effect, so their decision are based on how to interprete and favor of received information. (2) Respondents understand about the kind information of assets, liabilities, equities, revenue, and expense. (3) Respondents can use the information in the judgment of how much fund portion to invest.This study aims to make experimental in the form of accounting information framing effect if the given information showing nominal value in debit side only or credit side only. This study also give effort to develop the instrument in the form of statement cases after vew some former references in framing cases.The research contributions are, first to give understanding and viewpoint about the impact of assymmetry information by framing accounting information. The framing is in the form of serving account i...