Withholding Financial Statement Analysis Formulas When Instructing and Testing: A Desirable Difficulty
Posted: 8 Sep 2016
Date Written: July 15, 2016
This study investigated the effects of providing (versus withholding) formulas when first introducing financial statement analysis. In an experiment, students were randomly assigned to a formulas-given condition in which students were given formulas for two commonly used financial measures, a reasoning-explained condition in which a narrative explanation of the computational reasoning was given, or a control condition. The formulas-given condition outperformed the reasoning-explained condition on an unaided test given immediately after instruction, but then scored significantly worse on an unaided test given one week later. The control condition scored worse than both conditions except when given a formula sheet to use as an aid on a delayed test. Implications for financial education are discussed.
Keywords: Formulas, Desirable Difficulties, Directed Instruction, Discovery Learning
JEL Classification: A22, M41
Suggested Citation: Suggested Citation