In this paper, we investigate whether the current references to probability in standard setters' conceptual definitions of assets and liabilities cause individuals to believe that the probability of a future transfer of economic benefits must be above some meaningful threshold for an asset or a...

Managers appear to strategically use discretion over disclosure language to reduce the effect of bad news and/or amplify the effect of good news. We test how a cautionary notice highlighting management's discretion over disclosure language affects investors' reactions to more and less readable...

Hybrid financial instruments contain features of both liabilities and equity. Standard setters continue to struggle with “getting the classification right” for these complex instruments. In this paper, we experimentally test whether the features of hybrid instruments affect the...

We conduct two experiments to examine how investors react to nonverbal cues of certainty as displayed by a CEO communicating forward-looking information via the relatively new and emerging medium of video. Results of the first experiment suggest that, at least for the setting we examine,...

Causal reasoning involves understanding the cause of events that have already happened (i.e., diagnosis) as well as predicting which future events will occur (i.e., prediction). Although this type of reasoning is an important part of financial reporting and voluntary disclosure, very little...

Causal reasoning involves understanding the cause of events that have already happened (i.e., diagnosis) as well as predicting which future events will occur (i.e., prediction). Although this type of reasoning is an important part of financial reporting and voluntary disclosure, very little...

This paper outlines strengths and limitations of three approaches to providing process evidence in experimental accounting research: moderation, mediation, and multiple experiments and methods. We argue that the research question determines the importance of process evidence in experimental...

The objective of this paper is to cohesively introduce the notion of natural optimism into the accounting literature and to provide insights into the role of natural optimism in financial reporting on the part of firm managers. To accomplish this, we first discuss the research that demonstrates...

Firms often issue disaggregated earnings forecasts, and prior research reveals benefits to doing so. However, we hypothesize and experimentally find that the benefits of disaggregated forecasts do not necessarily carry over to the time of actual earnings announcements. Rather, disaggregated...

In this paper, we draw on judgment and decision making research to examine the behavioral implications of the SEC's Financial Reporting Release No. 48 on derivative and market risk disclosures. While these disclosures have been examined from an empirical point of view, no research has...