The use of financial information to estimate future cash flows may be influenced by the format and scaling of financial statement data. This study experimentally manipulated format by providing a graphical alternative to the conventional tabular presentation, and scaling by offering a probabilistic alternative to the single point estimates of financial statements. Subjects, recruited from large public accounting firms in the U.S., received the complete experiment in a self-contained computer diskette. The interaction of scaling and format characteristics produced significantly different cash flow estimates. Furthermore, subject tended to adjust their cash flow estimates based on the interaction of presentation and the skew of the distributional information when probabilistic information was provided. Subject also altered their cue utilization for the estimate of cash flow when they receive differently designed information. Implications for financial reporting and accounting education, centering around the revision of the basic information package, are drawn.
CITATION STYLE
Goldwater, P. M., & Fogarty, T. J. (2011). Cash Flow Decision Making And Financial Accounting Presentation: A Computerized Experiment. Journal of Applied Business Research (JABR), 11(3), 16. https://doi.org/10.19030/jabr.v11i3.5856
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