Shorter and easier is more useful: A longitudinal analysis of how financial report enforcement affects individual investors

Abstract

According to the literature, individual investors rarely use Accounting and Financial Information (AFI), even though they do not give it a particularly low valuation when asked. This behavior increases the risk to lose investments. The main contribution of this paper is to propose a new AFI format: a one-page report that is short and easy to understand, as a complement to the long and complex traditional format in order to increase the usefulness of information for investors and to decrease investment risk. Two experiments provide evidence about the increased usefulness of AFI when using the new proposed format. More importantly, it seems that results in terms of profits also improve considerably in medium (one year) and long-term (four year) investments, in contrast to more modest profits of speculative investments. Furthermore, this difference occurs regardless of the investors' previous experience.

What Best Explains Reporting Delays? A SME Population Level Study of Different Factors

“…During the course of more than fifty years, many studies have been conducted to analyse the importance of accounting information presentation for making decisions, e.g., [1][2][3], while the topic has attracted ongoing research interest [4,5]. One of the most important characteristics of accounting information is its utility for founded decisions by companies' stakeholders, while such utility is based on information availability and timeliness.…”