Disclosure Overload? A Professional‐User Perspective on the Usefulness of General Purpose Financial Statements

Posted: 9 May 2019

See all articles by Michael S. Drake

Michael S. Drake

Brigham Young University - Marriott School

Jeffrey Hales

University of Texas at Austin - Department of Accounting

Lynn L. Rees

Utah State University - Huntsman School of Business

Date Written: October 10, 2018

Abstract

We survey a broad group of professionals who use financial statements as part of their job to assess the extent to which they believe financial reports suffer from disclosure overload. Consistent with the claims made by regulators, auditors, and preparers, we find that a significant portion of professional financial statement users believe disclosure overload is a problem. However, this group is in the minority, with about twice as many professional users believing that overload is not a problem and that more information should be disclosed in financial statements. This dichotomy presents a difficult challenge to standard setters aiming to improve financial reporting by altering the amount of information provided in financial reports. To that end, we complement existing research on the informativeness of accounting information by measuring perceptions of the usefulness of the various financial statements and their footnotes across a variety of tasks. Finally, we develop a framework that could be useful in developing a theory of disclosure overload.

Keywords: disclosure overload, financial statements, financial statement footnotes, accounting usefulness, analysts

Suggested Citation

Drake, Michael S. and Hales, Jeffrey and Rees, Lynn L., Disclosure Overload? A Professional‐User Perspective on the Usefulness of General Purpose Financial Statements (October 10, 2018). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3370386

Michael S. Drake (Contact Author)

Brigham Young University - Marriott School ( email )

United States

Jeffrey Hales

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

Austin, TX 78712
United States
512-471-2163 (Phone)
512-471-3907 (Fax)

Lynn L. Rees

Utah State University - Huntsman School of Business ( email )

3500 Old Main Hill
Logan, UT 84322-3500
United States
435-797-2272 (Phone)

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