An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Alex C Yen
Suffolk University

Abstract: I use an experiment to examine the conditions under which expanded disclosures of non-financial intangibles information affect investor judgments of financial performance. Given the complexity of the relationships between today’s intangibles activities and future financial results, investors may fail to use the information contained in non-financial intangibles disclosures. Accordingly, disclosure alone of non-financial information may not be sufficient to influence investors’ judgments. However, if investors are also provided with a supplemental discussion of how a firm’s non-financial measures are causally linked to future financial performance, they may be more able to use the non-financial information. Experimental results for the full sample are mixed. For a subset of investors with relatively low familiarity with the industry setting used in the study, there is a stronger reaction to non-financial measures when the supplemental links discussion is provided.

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