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...

Standard setters have long deliberated the appropriate accounting for goodwill, with ambiguity surrounding its useful life complicating the issue. Recently, the FASB considered mandating a default useful life for goodwill with an option to deviate, but later decided to pause their deliberations...

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...

The provision of examples as implementation guidance is pervasive in accounting standards. Prior research has established that preparers engage in “example-based reasoning,” a tendency to favor the accounting treatment in an example, even when the example does not exactly match the...

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...

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...