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UFRS Temelli Bir Dipnotta Somut Dilin Belirginleştirilmesi. Bu Yatırım İsteğinin Artmasında Etkili olabilir mi?

Year 2019, Volume: 20 Issue: 1, 127 - 140, 01.01.2019

Emre Cengiz

Abstract

Uluslararası Finansal Raporlama Standartları UFRS , finansal dipnotların karar vericiler için gerekli ve ilgili bilgileri sade ve somut bir dille ifade edilmesi gerektiğini belirtmektedir. Böylelikle, bu çalışma UFRS temelli bir dipnottaki somut ifadelerin belirginleştirilmesinin, yatırımcıların o firmaya olan yatırım isteğini arttırdığını gösteren deneysel sonuçlar sunmaktadır. Çalışma, dilsel seçimlerin; yatırımcılar tarafından finansal enstrümanların seçimindeki karar sürecine nasıl etki yaptığını gösteren ve somut dilin belirginleştirilmesinin yatırım isteğini arttırdığını gösteren daha önceki deneysel çalışmalara katkı sağlamaktadır

Keywords

Finansal dipnot Yatırımcı Yeterliliği Somut Dil

References

  • Alter, A. L., & Oppenheimer, D. M. (2008). Effects of fluency on psychological distance and mental construal (or why New York is a large city, but New York is a civilized jungle): Research article. Psychological Science, 19(2), 161–167.
  • Baron, R. M., & Kenny, D. a. (1986). The Moderator-Mediator Variable Distinction in Social The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.
  • Bulmer, M. G. (1979). Principles of Statistics. New York: Dover.
  • Cooper, I., & Kaplanis, E. (1994). Home bias in equity portfolios, inflation hedging, and international capital market equilibrium. Review of Financial Studies, 7(1), 45–60.
  • Davis, A. K., & Tama-Sweet, I. (2012). Managers’ Use of Language Across Alternative Disclosure Outlets: Earnings Press Releases versus MD&A. Contemporary Accounting Research, 29(3), 804–837.
  • Davis, A. K., Piger, J. M., & Sedor, L. M. (2012). Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language. Contemporary Accounting Research, 29(3), 845–868.
  • Demers, E., & Vega, C. (2014). Linguistic Tone in Earnings Press Releases: News or Noise? http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1152326 Accessed 13.01.16 Paper), available on the internet at
  • Douglas, K. M., & Sutton, R. M. (2006). When what you say about others says something about you: Language abstraction and inferences about describers’ attitudes and goals. Journal of Experimental Social Psychology, 42(4), 500–508.
  • Elliott, W. B., & Elliott, W. B. (2006). Are Investors Influenced by Pro Forma Emphasis and Reconciliations in Earnings ? The Accounting Review, 81(1), 113– 133.
  • Elliott, W. B., Rennekamp, K. M., & White, B. J. (2015). Does concrete language in disclosures increase willingness to invest ? Review of Accounting Studies, 20, 839–865.
  • Feldman, R., Govindaraj, S., Livnat, J., & Segal, B. (2010). Management’s tone change, post earnings announcement drift and accruals. Review of Accounting Studies, 15(4), 915–953.
  • Frederickson, J., & Miller, J. (2004). The effects of pro forma earnings disclosures on analysts’ and nonprofessional investors’ equity valuation judgments. The Accounting Review, 79, 667–686.
  • Graham, J. R., Harvey, C. R., & Huang, H. (2009). Investor Competence, Trading Frequency, and Home Bias. Management Science, 55(7), 1094–1106.
  • Guzman, A. B., Lagdaan, L. F. M.& Lagoy, M. L. V. (2015). The role of life-space, social activity, and depression on the subjective memory complaints of community-dwelling Filipino elderly: A structural equation model, Educational Gerontology, 41(5), 348-360.
  • Hair, J., Black, W., Babin, B. & Anderson, R. (2010). Multivariate data analysis (7th ed.), Upper Saddle River, NJ: Prentice Hall.
  • Hales, J., Kuang, J., & Venkataraman, S. (2011). Who believes the hype? An experimental investigation of how language affects investor judgments. Journal of Accounting Research, 49, 223–255.
  • Hansen, J., & Wänke, M. (2010). Truth from language and truth from fit: the impact of linguistic concreteness and level of construal on subjective truth. Personality and Social Psychology Bulletin, 36(11), 1576–1588.
  • Hayes, A. F. (2009). Beyond Baron and Kenny : Statistical Mediation Analysis in the New Millennium, Communication Monographs, 76(4), 408–420.
  • Hayes, Andrew. F., (2013). Introduction to Mediation, Moderation, and Conditional Process Analysis: A Regression-Based Approach, New York: The Guilford Press.
  • Heath, C., & Tversky, A. (1991). Preferences and Beliefs: Ambiguity and Competence in Choice under Uncertainty. Journal of Risk and Uncertainty, 4(5), 5–28.
  • Heiberger, R. M. & Holland, B. (2004). Statistical Analysis and Data Display: An Intermediate Course with Examples in S-Plus, R, and SAS. New York: Springer- Verlag.
  • Henry, E. (2008). Are Investors Influenced By How Earnings Press Releases Are Written? Journal of Business Communication, 45(4), 363–407.
  • Hirst, D. E., & Hopkins, P. E. (1998). Comprehensive income reporting and analysts’ valuation judgments. Journal of Accounting Research, 36, 47–75.
  • Hirst, D. E., Koonce, L., & Venkataraman, S. (2007). How disaggregation enhances the credibility of management earnings forecasts. Journal of Accounting Research, 45, 811–837.
  • Hu, L. & Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives”, Structural Equation Modeling: A Multidisciplinary Journal, 6(1), 1-55.
  • Huberman, G. (2001). Familiarity Breeds Investment. Review of Financial Studies, 14(3), 659–680.
  • Iacobucci, D. (2009). Everything you always wanted to know about SEM (structural equations modeling) but were afraid to ask. Journal of Consumer Psychology, 19(4), 673–680.
  • Iacobucci, D. (2010). Structural equations modeling: Fit Indices, sample size, and advanced topics. Journal of Consumer Psychology, 20(1), 90–98.
  • Iacobucci, D., Saldanha, N., & Deng, X. (2007). A mediation on mediation: Evidence that structural equation models perform better than regression. Journal of Consumer Psychological, 7(2), 140–154.
  • International Accounting Standards Board (2016). IAS 1 Presentation of Financial Statements.
  • Jarvis, C.B., Mackenzie, S.B., Podsakoff, P.M., Mick, D.G. & Bearden, W.O. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. J. of Consumer Research, 30(2), 199-218.
  • Kadous, K., Krische, S. D., & Sedor, L. M. (2006). Using Counter-Explanation to Limit Analysts ’ Forecast Optimism, The Accounting Review, 81(2), 377–397.
  • Katz, S. B. (2001). Language and Persuasion in Biotechnology Communication with the Public: How to Not Say What You’re Not Going to Say and Not Say It. AgBioForum, 4(2), 93–97.
  • Kline, R. (2011). Principles and practice of structural equation modeling (3rd ed.). New York: Guilford Press.
  • Koonce, L., & Lipe, M. G. (2010). Earnings Trend and Performance Relative to Benchmarks: How Consistency Influences Their Joint Use. Journal of Accounting Research, 48(4), 859–884.
  • Kothari, S. P., Li, X., & Short, J. (2009). The effect of disclosures by management, analysts, and business press on cost of capital, return volatility, and analyst forecasts: A study using content analysis. The Accounting Review, 84, 1639– 1670.
  • Lawrence, A. (2013). Individual investors and financial disclosure. Journal of Accounting and Economics, 56(1), 130–147.
  • Lee, A. Y., Keller, P. A., & Sternthal, B. (2010). Value from Regulatory Construal Fit: The Persuasive Impact of Fit between Consumer Goals and Message Concreteness. Journal of Consumer Research, 36(5), 735–747.
  • Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, 45(2–3), 221–247.
  • Lundholm, R. J., Rogo, R., & Zhang, J. L. (2014). Restoring the Tower of Babel: How Foreign Firms Communicate with U.S. Investors, The Accounting Review, 89(4), 1453–1485.
  • MacKinnon, D. P., Fairchild, A. J., & Fritz, M. S. (2007). Mediation analysis. Annual Reviews of Psychology, 58, 593–614.
  • Maines, L. A., & McDaniel, L. S. (2000). Effects of comprehensive-income characteristics on nonprofessional investors’ judgments: The role of financial- statement presentation format. The Accounting Review, 75(2), 179–207
  • Maslowsky, J., Jager, J. & Hemken, D. (2015). Estimating and interpreting latent variable interactions: A tutorial for applying the latent moderated structural equations method. Int. Journal of Behavioral Development, 39(1), 87–96.
  • McCrea, S.M.; Wieber, F. & Myers, A.L.(2012).Construal level mind-sets moderate self and social stereotyping. J. of Personality and Social Psychology, 102(1), 51- 68.
  • Miller, B. P. (2010). The effects of reporting complexity on small and large investor trading. The Accounting Review, 85(6), 2107–2143.
  • Morris, M. W., Sheldon, O. J., Ames, D. R., & Young, M. J. (2007). Metaphors and the market: Consequences and preconditions of agent and object metaphors in stock market commentary. Organizational Behavior and Human Decision Processes, 102(2), 174–192.
  • Nunnally, J. (1978). Psychometric theory. New York: McGraw-Hill.
  • O’Brien, R.M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41, 673–690.
  • Perry, J. L., Nicholls, A. R., Clough, P. J. & Crust, L. (2015). Assessing model fit: Caveats and recommendations for confirmatory factor analysis and exploratory structural equation modeling. Measurement in Physical Education and Exercise Science, 19(1). 12-21.
  • PricewaterhouseCoopers (2014). Financial https://www.pwc.com/us/en/cfodirect/assets/pdf/accounting-guides/pwc-guide- financial-statement-presentation-2014.pdf statement presentation 2014.
  • Rennekamp, K. (2012). Processing Fluency and Investors’ Reactions to Disclosure Readability. Journal of Accounting Research, 50(5), 1319–1354.
  • Securities and Exchange Commission. (1998). A plain English handbook: How to create clear SEC disclosure. Washington, DC: SEC Office of Investor Education and Assistance. http://www.sec.gov/pdf/handbook.pdf
  • Sedor, L. M. (2002). An explanation for unintentional optimism in analysts’ earnings forecasts. The Accounting Review, 77(4), 731–753.
  • Semin, G. R., & Fiedler, K. (1988). The cognitive functions of linguistic categories in describing persons: Social cognition and language. Journal of Personality and Social Psychology, 54(4), 558–568.
  • Sposito, V. A., Hand, M. L., & Skarpness, B. (1983). On the efficiency of using the sample kurtosis in selecting optimal Lp estimators. Communications in Statistics - Simulation and Computation, 12(3), 265–272.
  • Stephan, E., Liberman, N., & Trope, Y. (2011). The effects of time perspective and level of construal on social distance. J. of Experimental Social Psychology, 47(2), 397–402.
  • Tan, H.-T., Wang, E., & Zhou, B. (2013). How does readability influence investors’ judgments? Consistency of benchmark performance matters. (Working paper), available http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1888970 Accessed 09.02.16 the internet at
  • Wigboldus, D. H., Semin, G. R., & Spears, R. (2000). How do we communicate stereotypes? Linguistic bases and inferential consequences. J. of Personality and Social Psychology, 78(1), 5–18.
  • You, H., & Zhang, X. jun. (2009). Financial reporting complexity and investor underreaction to 10-k information. Review of Accounting Studies, 14(4), 559– 586.

Highlighting the Concrete Language in IFRS Based Footnote. Would that Really Help to Increase Willingness to Invest?

Year 2019, Volume: 20 Issue: 1, 127 - 140, 01.01.2019

Emre Cengiz

Abstract

IFRS International Financial Reporting Standards suggests that financial footnotes should present the necessary and relevant information for decision makers by using plain and concrete language. Thus, this study presents the empirical evidence that highlighting concrete language in an IFRS based financial footnote increases the investors’ willingness to invest in a firm. This study contributes the previous literature on how linguistic preferences in financial instruments affect the judgment of investors by showing empirical evidence that highlighting the concrete language may increase the investors’ willingness to invest.

Keywords

Financial footnote Investor Competence Concrete Language

References

  • Alter, A. L., & Oppenheimer, D. M. (2008). Effects of fluency on psychological distance and mental construal (or why New York is a large city, but New York is a civilized jungle): Research article. Psychological Science, 19(2), 161–167.
  • Baron, R. M., & Kenny, D. a. (1986). The Moderator-Mediator Variable Distinction in Social The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.
  • Bulmer, M. G. (1979). Principles of Statistics. New York: Dover.
  • Cooper, I., & Kaplanis, E. (1994). Home bias in equity portfolios, inflation hedging, and international capital market equilibrium. Review of Financial Studies, 7(1), 45–60.
  • Davis, A. K., & Tama-Sweet, I. (2012). Managers’ Use of Language Across Alternative Disclosure Outlets: Earnings Press Releases versus MD&A. Contemporary Accounting Research, 29(3), 804–837.
  • Davis, A. K., Piger, J. M., & Sedor, L. M. (2012). Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language. Contemporary Accounting Research, 29(3), 845–868.
  • Demers, E., & Vega, C. (2014). Linguistic Tone in Earnings Press Releases: News or Noise? http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1152326 Accessed 13.01.16 Paper), available on the internet at
  • Douglas, K. M., & Sutton, R. M. (2006). When what you say about others says something about you: Language abstraction and inferences about describers’ attitudes and goals. Journal of Experimental Social Psychology, 42(4), 500–508.
  • Elliott, W. B., & Elliott, W. B. (2006). Are Investors Influenced by Pro Forma Emphasis and Reconciliations in Earnings ? The Accounting Review, 81(1), 113– 133.
  • Elliott, W. B., Rennekamp, K. M., & White, B. J. (2015). Does concrete language in disclosures increase willingness to invest ? Review of Accounting Studies, 20, 839–865.
  • Feldman, R., Govindaraj, S., Livnat, J., & Segal, B. (2010). Management’s tone change, post earnings announcement drift and accruals. Review of Accounting Studies, 15(4), 915–953.
  • Frederickson, J., & Miller, J. (2004). The effects of pro forma earnings disclosures on analysts’ and nonprofessional investors’ equity valuation judgments. The Accounting Review, 79, 667–686.
  • Graham, J. R., Harvey, C. R., & Huang, H. (2009). Investor Competence, Trading Frequency, and Home Bias. Management Science, 55(7), 1094–1106.
  • Guzman, A. B., Lagdaan, L. F. M.& Lagoy, M. L. V. (2015). The role of life-space, social activity, and depression on the subjective memory complaints of community-dwelling Filipino elderly: A structural equation model, Educational Gerontology, 41(5), 348-360.
  • Hair, J., Black, W., Babin, B. & Anderson, R. (2010). Multivariate data analysis (7th ed.), Upper Saddle River, NJ: Prentice Hall.
  • Hales, J., Kuang, J., & Venkataraman, S. (2011). Who believes the hype? An experimental investigation of how language affects investor judgments. Journal of Accounting Research, 49, 223–255.
  • Hansen, J., & Wänke, M. (2010). Truth from language and truth from fit: the impact of linguistic concreteness and level of construal on subjective truth. Personality and Social Psychology Bulletin, 36(11), 1576–1588.
  • Hayes, A. F. (2009). Beyond Baron and Kenny : Statistical Mediation Analysis in the New Millennium, Communication Monographs, 76(4), 408–420.
  • Hayes, Andrew. F., (2013). Introduction to Mediation, Moderation, and Conditional Process Analysis: A Regression-Based Approach, New York: The Guilford Press.
  • Heath, C., & Tversky, A. (1991). Preferences and Beliefs: Ambiguity and Competence in Choice under Uncertainty. Journal of Risk and Uncertainty, 4(5), 5–28.
  • Heiberger, R. M. & Holland, B. (2004). Statistical Analysis and Data Display: An Intermediate Course with Examples in S-Plus, R, and SAS. New York: Springer- Verlag.
  • Henry, E. (2008). Are Investors Influenced By How Earnings Press Releases Are Written? Journal of Business Communication, 45(4), 363–407.
  • Hirst, D. E., & Hopkins, P. E. (1998). Comprehensive income reporting and analysts’ valuation judgments. Journal of Accounting Research, 36, 47–75.
  • Hirst, D. E., Koonce, L., & Venkataraman, S. (2007). How disaggregation enhances the credibility of management earnings forecasts. Journal of Accounting Research, 45, 811–837.
  • Hu, L. & Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives”, Structural Equation Modeling: A Multidisciplinary Journal, 6(1), 1-55.
  • Huberman, G. (2001). Familiarity Breeds Investment. Review of Financial Studies, 14(3), 659–680.
  • Iacobucci, D. (2009). Everything you always wanted to know about SEM (structural equations modeling) but were afraid to ask. Journal of Consumer Psychology, 19(4), 673–680.
  • Iacobucci, D. (2010). Structural equations modeling: Fit Indices, sample size, and advanced topics. Journal of Consumer Psychology, 20(1), 90–98.
  • Iacobucci, D., Saldanha, N., & Deng, X. (2007). A mediation on mediation: Evidence that structural equation models perform better than regression. Journal of Consumer Psychological, 7(2), 140–154.
  • International Accounting Standards Board (2016). IAS 1 Presentation of Financial Statements.
  • Jarvis, C.B., Mackenzie, S.B., Podsakoff, P.M., Mick, D.G. & Bearden, W.O. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. J. of Consumer Research, 30(2), 199-218.
  • Kadous, K., Krische, S. D., & Sedor, L. M. (2006). Using Counter-Explanation to Limit Analysts ’ Forecast Optimism, The Accounting Review, 81(2), 377–397.
  • Katz, S. B. (2001). Language and Persuasion in Biotechnology Communication with the Public: How to Not Say What You’re Not Going to Say and Not Say It. AgBioForum, 4(2), 93–97.
  • Kline, R. (2011). Principles and practice of structural equation modeling (3rd ed.). New York: Guilford Press.
  • Koonce, L., & Lipe, M. G. (2010). Earnings Trend and Performance Relative to Benchmarks: How Consistency Influences Their Joint Use. Journal of Accounting Research, 48(4), 859–884.
  • Kothari, S. P., Li, X., & Short, J. (2009). The effect of disclosures by management, analysts, and business press on cost of capital, return volatility, and analyst forecasts: A study using content analysis. The Accounting Review, 84, 1639– 1670.
  • Lawrence, A. (2013). Individual investors and financial disclosure. Journal of Accounting and Economics, 56(1), 130–147.
  • Lee, A. Y., Keller, P. A., & Sternthal, B. (2010). Value from Regulatory Construal Fit: The Persuasive Impact of Fit between Consumer Goals and Message Concreteness. Journal of Consumer Research, 36(5), 735–747.
  • Li, F. (2008). Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, 45(2–3), 221–247.
  • Lundholm, R. J., Rogo, R., & Zhang, J. L. (2014). Restoring the Tower of Babel: How Foreign Firms Communicate with U.S. Investors, The Accounting Review, 89(4), 1453–1485.
  • MacKinnon, D. P., Fairchild, A. J., & Fritz, M. S. (2007). Mediation analysis. Annual Reviews of Psychology, 58, 593–614.
  • Maines, L. A., & McDaniel, L. S. (2000). Effects of comprehensive-income characteristics on nonprofessional investors’ judgments: The role of financial- statement presentation format. The Accounting Review, 75(2), 179–207
  • Maslowsky, J., Jager, J. & Hemken, D. (2015). Estimating and interpreting latent variable interactions: A tutorial for applying the latent moderated structural equations method. Int. Journal of Behavioral Development, 39(1), 87–96.
  • McCrea, S.M.; Wieber, F. & Myers, A.L.(2012).Construal level mind-sets moderate self and social stereotyping. J. of Personality and Social Psychology, 102(1), 51- 68.
  • Miller, B. P. (2010). The effects of reporting complexity on small and large investor trading. The Accounting Review, 85(6), 2107–2143.
  • Morris, M. W., Sheldon, O. J., Ames, D. R., & Young, M. J. (2007). Metaphors and the market: Consequences and preconditions of agent and object metaphors in stock market commentary. Organizational Behavior and Human Decision Processes, 102(2), 174–192.
  • Nunnally, J. (1978). Psychometric theory. New York: McGraw-Hill.
  • O’Brien, R.M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41, 673–690.
  • Perry, J. L., Nicholls, A. R., Clough, P. J. & Crust, L. (2015). Assessing model fit: Caveats and recommendations for confirmatory factor analysis and exploratory structural equation modeling. Measurement in Physical Education and Exercise Science, 19(1). 12-21.
  • PricewaterhouseCoopers (2014). Financial https://www.pwc.com/us/en/cfodirect/assets/pdf/accounting-guides/pwc-guide- financial-statement-presentation-2014.pdf statement presentation 2014.
  • Rennekamp, K. (2012). Processing Fluency and Investors’ Reactions to Disclosure Readability. Journal of Accounting Research, 50(5), 1319–1354.
  • Securities and Exchange Commission. (1998). A plain English handbook: How to create clear SEC disclosure. Washington, DC: SEC Office of Investor Education and Assistance. http://www.sec.gov/pdf/handbook.pdf
  • Sedor, L. M. (2002). An explanation for unintentional optimism in analysts’ earnings forecasts. The Accounting Review, 77(4), 731–753.
  • Semin, G. R., & Fiedler, K. (1988). The cognitive functions of linguistic categories in describing persons: Social cognition and language. Journal of Personality and Social Psychology, 54(4), 558–568.
  • Sposito, V. A., Hand, M. L., & Skarpness, B. (1983). On the efficiency of using the sample kurtosis in selecting optimal Lp estimators. Communications in Statistics - Simulation and Computation, 12(3), 265–272.
  • Stephan, E., Liberman, N., & Trope, Y. (2011). The effects of time perspective and level of construal on social distance. J. of Experimental Social Psychology, 47(2), 397–402.
  • Tan, H.-T., Wang, E., & Zhou, B. (2013). How does readability influence investors’ judgments? Consistency of benchmark performance matters. (Working paper), available http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1888970 Accessed 09.02.16 the internet at
  • Wigboldus, D. H., Semin, G. R., & Spears, R. (2000). How do we communicate stereotypes? Linguistic bases and inferential consequences. J. of Personality and Social Psychology, 78(1), 5–18.
  • You, H., & Zhang, X. jun. (2009). Financial reporting complexity and investor underreaction to 10-k information. Review of Accounting Studies, 14(4), 559– 586.
There are 59 citations in total.

Details

Primary Language English
Journal Section Research Article
Authors

Emre Cengiz This is me

Publication Date January 1, 2019
Published in Issue Year 2019 Volume: 20 Issue: 1

Cite

APA Cengiz, E. (2019). Highlighting the Concrete Language in IFRS Based Footnote. Would that Really Help to Increase Willingness to Invest?. Doğuş Üniversitesi Dergisi, 20(1), 127-140.