Withholding Financial Statement Analysis Formulas When Instructing and Testing: A Desirable Difficulty

Posted: 8 Sep 2016

Date Written: July 15, 2016

Abstract

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

Phillips, Fred, Withholding Financial Statement Analysis Formulas When Instructing and Testing: A Desirable Difficulty (July 15, 2016). Available at SSRN: https://ssrn.com/abstract=2835694

Fred Phillips (Contact Author)

University of Saskatchewan ( email )

Edwards School of Business
25 Campus Drive
Saskatoon, Saskatchewan S7N 5A7
Canada
306-966-8401 (Phone)
306-966-2514 (Fax)

HOME PAGE: http://edwards.usask.ca/faculty/Fred%20Phillips/index.html

Register to save articles to
your library

Register

Paper statistics

Abstract Views
907
PlumX Metrics