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Information order effects in the context of management commentary—initial experimental evidence

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  • Jochen Theis
  • Kristina Yankova
  • Marc Eulerich

Abstract

The exploration of information order effects has been a prominent topic in judgment and decision-making research in accounting in the last decades. While the vast majority of this research has focused on auditors’ and tax professionals’ judgments, the effects of information order on nonprofessionals’ belief revisions in a financial reporting context has largely remained unexamined. In the present paper, we provide initial experimental evidence on the impact that order effects have on the processing and evaluation of information provided in the management commentary. We find that the order in which management provides information about a firm’s risks and chances has a significant influence on individuals’ assessment of the economic position and prospects of the firm. In particular, our results show that whether the last pieces of information presented are positive or negative, financial statement users weight these items more heavily than the initially obtained ones. The paper outlines the major implications of these results as well as some opportunities for future research. Copyright Springer-Verlag Berlin Heidelberg 2012

Suggested Citation

  • Jochen Theis & Kristina Yankova & Marc Eulerich, 2012. "Information order effects in the context of management commentary—initial experimental evidence," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(2), pages 133-150, November.
    • Handle: RePEc:spr:metrik:v:23:y:2012:i:2:p:133-150
    DOI: 10.1007/s00187-012-0160-0
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    References listed on IDEAS

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