Numerical Formats within Risk Disclosures and the Moderating Effect of Investors’ Disclosure Management Concerns

Nelson, Mark W.; Rupar, Kathy

doi:10.2139/ssrn.1859603

Cited by 6 publications

(9 citation statements)

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“…Rupar (2011, 2015) did not find the significant three-way interaction predicted. Nelson and Rupar (2015) report mean risk assessments that are averaged across the low-and high-incentive conditions, whereas Nelson and Rupar (2011) report the mean risk assessments for each cell in the 2×2×2 design.…”

Section: Resultsmentioning

confidence: 99%

Investment Experience, Financial Literacy, and Investment‐Related Judgments

Krische

2019

Contemporary Accting Res

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This research examines how investment experience and financial literacy impact investment‐related judgments. Financial literacy refers to a person's knowledge of fundamental financial concepts. I begin by documenting investors' demographic characteristics and financial literacy using a relatively large sample of participants (n > 2,000) recruited from Amazon's Mechanical Turk under different categories of investment experience, which I benchmark against national samples of financial capability skills in the United States. I then replicate a sample of three accounting research experiments, varying the type and depth of the underlying accounting issue. Across the three experiments, the data show two main results: First, investment experience strengthens the influence of financial accounting disclosures on participants' investment‐related judgments. Second, financial literacy further strengthens the influence of financial accounting disclosures on investors' (but not noninvestors') judgments. Collectively, these findings suggest that investment experience and financial literacy can help to identify individuals who are more likely to be able and willing to study financial reporting information with reasonable diligence as they form their investment‐related judgments.

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Section: Resultsmentioning

confidence: 99%

Investment Experience, Financial Literacy, and Investment‐Related Judgments

Krische

2019

Contemporary Accting Res

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“…Nelson and Rupar [2011] study whether investor risk assessment is affected by numerical disclosure versus percentage disclosure for potential downside risk. Nelson and Rupar [2011] find that numerical disclosure leads to higher risk assessment compared with percentage disclosure, but only when the disclosure format is mandatory rather than discretionary. Investors subconsciously anchor on the bigger number (compared with percentage) and therefore infer higher risk.…”

Section: Sensitivity Analysismentioning

confidence: 99%

“…When the disclosure format is mandated, investors perceive little room for managers to manipulate it and therefore are less vigilant to manager's strategic disclosure. In contrast, when the disclosure format is voluntary, investors are vigilant to managers' attempt to manipulate the disclosure format and therefore try to counteract the effect of this manipulation [Nelson and Rupar, 2011].…”

Section: Regulatory Environmentmentioning

confidence: 99%

“…Experimental studies have the unique advantage of creating a regulatory environment in the lab which may not exist in the real world, and being able to compare and contrast management and/or investor behaviors under existing versus proposed regulations [Bhojraj and Libby, 2005;Nelson and Rupar, 2011]. Management earnings guidance is voluntary disclosure where very few regulations are in existence [Hirst et al, 2008].…”

Section: Regulatory Environmentmentioning

confidence: 99%

“…Second, experimenters can measure process variables and provide answers to questions such as why certain phenomena occur . Finally, experimental research is able to provide ex ante evidence on guidance issues for which little or no archival data are available [e.g., Nelson and Rupar, 2011]. It thus may contribute to accounting policy research [Maines, 1994].…”

Section: Introductionmentioning

confidence: 99%

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A literature synthesis of experimental studies on management earnings guidance

Han

2013

Journal of Accounting Literature

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Researchers have long been interested in understanding why and how corporate managers issue earnings guidance and the effect of such guidance on stakeholders' (investors' and managers') behavior. Several recent studies have employed the experimental approach to address these issues. The purpose of this paper is to analyze and synthesize the literature on experimental studies of management earnings guidance. Consistent with the literature, I organize the synthesis to reflect (a) whether, why and how management issues guidance; (b) investors' reactions to guidance; (c) the effect of guidance on management behavior. In addition, I provide institutional information (e.g., nature and timing of guidance) about guidance as well as provide several directions for future research. The synthesis reveals that the experimental studies have made a unique contribution to this literature by (i) providing evidence on process variables that underlie some empirical associations, (ii) directly measuring managers' personal attributes and, (iii) closing the causality gap in the guidance literature.

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Risk Reporting Quality: Implications of Academic Research for Financial Reporting Policy

Ryan

2011

SSRN Journal

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Numerical Formats within Risk Disclosures and the Moderating Effect of Investors’ Disclosure Management Concerns

Cited by 6 publications

References 0 publications

Investment Experience, Financial Literacy, and Investment‐Related Judgments

Investment Experience, Financial Literacy, and Investment‐Related Judgments

A literature synthesis of experimental studies on management earnings guidance

Risk Reporting Quality: Implications of Academic Research for Financial Reporting Policy

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