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Linked balance sheet presentation

Author

Listed:
  • Koonce, Lisa
  • Leitter, Zheng
  • White, Brian J.

Abstract

Certain financial statement items are closely related, such as items in hedging relationships. In this paper, we develop theory and conduct two experiments to investigate three different balance sheet presentation formats for related financial statement items. We posit that a linked presentation format rarely used in practice allows financial statement users to better distinguish among firms with different economics. Neither net presentation nor separate presentation of related balance sheet items allows users to make this distinction. The results of two experiments—one in a hedging context and the other in a lending context—support our theory-based predictions.

Suggested Citation

  • Koonce, Lisa & Leitter, Zheng & White, Brian J., 2019. "Linked balance sheet presentation," Journal of Accounting and Economics, Elsevier, vol. 68(1).
    • Handle: RePEc:eee:jaecon:v:68:y:2019:i:1:s0165410119300321
    DOI: 10.1016/j.jacceco.2019.101237
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    References listed on IDEAS

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    1. Frank D. Hodge & Patrick E. Hopkins & David A. Wood, 2010. "The Effects of Financial Statement Information Proximity and Feedback on Cash Flow Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 27(1), pages 3-3, March.
    2. Tim Loughran & Bill Mcdonald, 2014. "Measuring Readability in Financial Disclosures," Journal of Finance, American Finance Association, vol. 69(4), pages 1643-1671, August.
    3. Koonce, Lisa & Seybert, Nick & Smith, James, 2011. "Causal reasoning in financial reporting and voluntary disclosure," Accounting, Organizations and Society, Elsevier, vol. 36(4), pages 209-225.
    4. Dyer, Travis & Lang, Mark & Stice-Lawrence, Lorien, 2017. "The evolution of 10-K textual disclosure: Evidence from Latent Dirichlet Allocation," Journal of Accounting and Economics, Elsevier, vol. 64(2), pages 221-245.
    5. Frank D. Hodge & Patrick E. Hopkins & David A. Wood, 2010. "The Effects of Financial Statement Information Proximity and Feedback on Cash Flow Forecasts," Contemporary Accounting Research, John Wiley & Sons, vol. 27(1), pages 101-133, March.
    6. Robert Libby & Scott A. Emett, 2014. "Earnings presentation effects on manager reporting choices and investor decisions," Accounting and Business Research, Taylor & Francis Journals, vol. 44(4), pages 410-438, August.
    7. Libby, Robert & Bloomfield, Robert & Nelson, Mark W., 2002. "Experimental research in financial accounting," Accounting, Organizations and Society, Elsevier, vol. 27(8), pages 775-810, November.
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    Cited by:

    1. Anantharaman, Divya & Chuk, Elizabeth & Kamath, Saipriya, 2024. "A demotion in disguise? The real effects of relocating pension smoothing from operating income to non-operating income," LSE Research Online Documents on Economics 124405, London School of Economics and Political Science, LSE Library.
    2. Kai A. Bauch & Peter Kotzian & Barbara E. Weißenberger, 2021. "Likeability in subjective performance evaluations: does it bias managers’ weighting of performance measures?," Journal of Business Economics, Springer, vol. 91(1), pages 35-59, February.

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    More about this item

    Keywords

    Financial statements; Linked presentation; Causal reasoning;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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