Linked Balance Sheet Presentation

49 Pages Posted: 9 Jun 2017 Last revised: 13 Jun 2019

See all articles by Lisa Koonce

Lisa Koonce

University of Texas

Zheng Leitter

Nanyang Technological University

Brian J. White

University of Texas at Austin - Department of Accounting

Date Written: June 12, 2019

Abstract

Certain financial statement items are closely related, such as items in hedging relationships. In this paper, we develop theory and conduct two experiments to investigate three different balance sheet presentation formats for related financial statement items. We posit that a linked presentation format rarely used in practice allows financial statement users to better distinguish among firms with different economics. Neither net presentation nor separate presentation of related balance sheet items allows users to make this distinction. The results of two experiments—one in a hedging context and the other in a lending context—support our theory-based predictions.

Keywords: financial statements, linked presentation, causal reasoning

JEL Classification: D81, M41

Suggested Citation

Koonce, Lisa L. and Leitter, Zheng and White, Brian J., Linked Balance Sheet Presentation (June 12, 2019). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2983195 or http://dx.doi.org/10.2139/ssrn.2983195

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)

Zheng Leitter

Nanyang Technological University ( email )

Nanyang Business School
Department of Accounting
Singapore, 639798
Singapore

Brian J. White

University of Texas at Austin - Department of Accounting ( email )

Austin, TX 78712
United States

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