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The usefulness of financial accounting information : evidence from the field
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Cascino, Stefano, Clatworthy, Mark A., García Osma, Beatriz, Gassen, Joachim and Imam, Shahed (2021) The usefulness of financial accounting information : evidence from the field. The Accounting Review, 96 (6). pp. 73-102. doi:10.2308/TAR-2019-1030 ISSN 1558-7967.
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Official URL: http://dx.doi.org/10.2308/TAR-2019-1030
Abstract
We examine how investment professionals assess the usefulness of financial accounting information depending on their information acquisition objectives and preparers’ earnings management incentives. We conduct a survey experiment based on face-to-face interviews with investment professionals and document two main results. First, we find that, compared with investment professionals assigned a firm valuation objective, those assigned a managerial performance evaluation objective assess accounting information as significantly less useful. Second, we find no systematic evidence that preparers’ earnings management incentives negatively affect investment professionals’ assessments of accounting information usefulness. To elucidate this second finding, we conduct a large-scale follow-up online experiment. Our results continue to offer no support for the effect of earnings management incentives on investment professionals’ assessments of accounting information usefulness, irrespective of preparers’ corporate governance quality. Instead, we find that poor corporate governance, by itself, reduces the usefulness of accounting information to investment professionals.
| Item Type: | Journal Article | |||||||||||||||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance |
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| Divisions: | Faculty of Social Sciences > Warwick Business School | |||||||||||||||||||||
| Library of Congress Subject Headings (LCSH): | Accounting, Financial statements , Corporate governance, Earnings management | |||||||||||||||||||||
| Journal or Publication Title: | The Accounting Review | |||||||||||||||||||||
| Publisher: | American Accounting Association | |||||||||||||||||||||
| ISSN: | 1558-7967 | |||||||||||||||||||||
| Official Date: | 17 February 2021 | |||||||||||||||||||||
| Dates: |
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| Volume: | 96 | |||||||||||||||||||||
| Number: | 6 | |||||||||||||||||||||
| Page Range: | pp. 73-102 | |||||||||||||||||||||
| DOI: | 10.2308/TAR-2019-1030 | |||||||||||||||||||||
| Status: | Peer Reviewed | |||||||||||||||||||||
| Publication Status: | Published | |||||||||||||||||||||
| Access rights to Published version: | Restricted or Subscription Access | |||||||||||||||||||||
| Date of first compliant deposit: | 22 February 2021 | |||||||||||||||||||||
| Date of first compliant Open Access: | 23 February 2021 | |||||||||||||||||||||
| RIOXX Funder/Project Grant: |
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