, Volume 23, Issue 2, pp 133-150
Date: 07 Nov 2012

Information order effects in the context of management commentary—initial experimental evidence

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The exploration of information order effects has been a prominent topic in judgment and decision-making research in accounting in the last decades. While the vast majority of this research has focused on auditors’ and tax professionals’ judgments, the effects of information order on nonprofessionals’ belief revisions in a financial reporting context has largely remained unexamined. In the present paper, we provide initial experimental evidence on the impact that order effects have on the processing and evaluation of information provided in the management commentary. We find that the order in which management provides information about a firm’s risks and chances has a significant influence on individuals’ assessment of the economic position and prospects of the firm. In particular, our results show that whether the last pieces of information presented are positive or negative, financial statement users weight these items more heavily than the initially obtained ones. The paper outlines the major implications of these results as well as some opportunities for future research.

The full case materials are available from the author upon request.