The Effects of Information Disaggregation and Financial Statement Interactivity on Judgments and Decisions of Nonprofessional Investors

ABSTRACT: Despite recent advances in Internet reporting technologies and calls for the increased reporting of disaggregated financial information, extant accounting research has not examined the potential positive and negative effects of providing disaggregated information using interactive web-based financial statements. In an experiment with nonprofessional investors, we investigate whether an Internet technology that provides investors control over the viewing of disaggregated financial information improves investment-related judgments and decisions and whether such effects depend on the utility of the disaggregation. In support of the notion that interactivity mitigates information overload, we find some evidence that the use of the drilldown capability is associated with a decrease in investors' perceived cognitive load. Results also show that investors using a drilldown capability are less susceptible to earnings fixation compared to investors viewing the disaggregation without the drilldown feature...