The importance of quantifying uncertainty: Examining the effects of quantitative sensitivity analysis and audit materiality disclosures on investors’ judgments and decisions

Tax aggressiveness and the proportion of quantitative information in income tax footnotes

“…Quantitative data is measurable, toneless and objective in appearance. Prior studies have suggested that quantitative data is more persuasive than qualitative data and may help investors to estimate uncertainty (Maaloul and Zeghal, 2015; Kadous et al , 2005; Eilifsen et al , 2020). The sample used shows that quantitative data accounts for the majority of the words in income tax footnotes.…”

“…Rajgopal (1999) suggested that quantitative disclosure helps investors to evaluate risk exposures. Eilifsen et al (2020) conducted experiments and found that investors consider qualitative sensitivity analysis in fair value measurements to be less reliable than quantitative sensitivity analysis. Maaloul and Zeghal (2015) analysed the intellectual capital disclosure in annual reports by companies listed in the S&P 500 Index.…”

“…Therefore, quantitative data provides more persuasive, or “hard” information than qualitative data (Maaloul and Zeghal, 2015; Benlemlih et al , 2018). Prior studies have suggested that quantitative financial data can be more persuasive than qualitative data and investors process quantitative data differently than they do qualitative data (Kadous et al , 2005; Eilifsen et al , 2020). Requests for more disclosure of quantitative data are also commonly seen in the comment letters during review of annual/quarterly reports by the Securities and Exchange Commission (SEC) (Bozanic et al , 2017a).…”

“…This paper contributes to the disclosure literature by showing that tax-aggressive firms not only have less readable text in their income tax footnotes (Inger et al , 2018), but that their income tax footnotes also contain less quantitative data. Prior studies on the disclosure of quantitative data have focused on users’ reactions (Kida and Smith, 1995; Kadous et al , 2005; Eilifsen et al , 2020). While these analyses emphasized the importance of quantitative data to users, none has examined what factors affect preparers’ incentives to disclose more quantitative data.…”

Assessment Of The Financial Statement Accuracy For The Russian Companies Financial Security

“…Financial reporting in modern corporate management is one of the tools designed to reduce risks in relation to the committed facts of the company's business life to ensure its economic and financial security (Eilifsen et al, 2020). You can identify the strengths and weaknesses of the organization while carrying out the detailed analysis of the reporting.…”