A comparison of the impact of summary annual reports and complete annual reports on investment and credit decisions.

摘要

This study examines the impact of summary annual reports and complete annual reports on decision making. Historically, companies made their financial statements available to users through complete annual reports. More recently, some companies have started sending condensed versions of their complete annual reports to the users. These condensed versions are the SARs.; Proponents of SARs have argued that the complete annual reports are too compliance-oriented and inflexible to be effective vehicles for communicating with users, and that the complete annual reports lead to information overload in users. Opponents of SARs have expressed concerns that the SARs do not meet the basic characteristics of the Financial Accounting Standards Board's conceptual framework of what is relevant and useful to the users of financial statements. While the debate of whether SARs should be allowed to be used continues, there is no systematic evidence in the literature as to which form of reporting (summary or complete) is better. This study, by examining the impact of SARs and complete annual reports on decision making, permits the determination of whether the SAR is as useful a form of annual report as the complete annual report for decision making.; Theoretical support for the hypotheses were drawn from theories relating to information load and functional fixation. A between-subjects design was used. Accounting students from a major north-eastern university made either investment or credit decisions. MANOVAs, ANOVAs and planned comparisons of groups were used to analyze the results.; The results indicate that the decision making of SAR users is similar to the decision making of complete annual report users for both the investing and lending groups. Thus users appear not to suffer from information overload. This may because they fixated on bottom-line numbers or financial ratios in their decision making. This explanation is consistent with functional fixation theory. Subjects also reported that they relied on the financial statements when they were making their decisions. Since financial statements were available in the SAR as well as in the complete annual report, this would explain why the SAR is as useful as the complete annual report.