Sec Market Risk Disclosures: Implications for Judgment and Decision Making

Posted: 26 Dec 2000

See all articles by Leslie D. Hodder

Leslie D. Hodder

Indiana University - Kelley School of Business - Department of Accounting

Lisa Koonce

University of Texas

Mary Lea McAnally

Texas A&M University - Department of Accounting

Abstract

In this paper, we draw on judgment and decision making research to examine the behavioral implications of the SEC's Financial Reporting Release No. 48 on market risk disclosures. While these disclosures have been examined using archival data, no research has investigated how these disclosures might affect individual users of financial statements. The purpose of our paper is to draw on research in the judgment and decision making arena to identify and analyze the behavioral implications of the new risk disclosures. We offer three conclusions. First, FRR48 users may have more complex evaluations of risk than perhaps anticipated by the SEC. Second, the flexibility accorded firms in FRR48 will adversely affect users' risk judgments. Third, because the Release does not require disclosure of certain quantitative information that is important to risk assessments, inappropriate risk assessments may result. We believe our insights can help others conduct research in this important area and can help the SEC when they revisit the disclosure requirements in Release No. 48.

JEL Classification: G18, M41, M45, K22

Suggested Citation

Davis Hodder, Leslie D. and Koonce, Lisa L. and McAnally, Mary Lea, Sec Market Risk Disclosures: Implications for Judgment and Decision Making. Accounting Horizons, March 2001. Available at SSRN: https://ssrn.com/abstract=250450

Leslie D. Davis Hodder

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Lisa L. Koonce (Contact Author)

University of Texas ( email )

Dept. of Accounting
McCombs School of Business
Austin, TX 78712
United States
512-471-5576 (Phone)
512-471-3904 (Fax)

Mary Lea McAnally

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States
979-845-5017 (Phone)
979-845-0014 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,519
PlumX Metrics