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Representation and value relevance of net income versus comprehensive income on millennials’ financial decision-making

Representation and value relevance of net income versus comprehensive income on millennials’... Financial representation research has gained considerable attention among researchers. The argument is on representation preferences and the effect of graph versus text representation of financial data. The display format for net income (NI) and comprehensive income (CI) has been proven to influence users’ financial decision-making process, depending upon users’ characteristics. It is worth noting that millennials are users whose characteristics and cognitive skills differ from those of preceding generations. This study aims to unravel millennials’ preferences for the earnings information and representation when making financial analysis and judgement, thus providing insight on their decision-making strategy, either perceptual or analytical.Design/methodology/approachThis study used a 2 × 2 full factorial of experimental design, in which the financial representation in the following two ways: the textual disclosure content (NI versus CI) and the graphical display content (NI versus CI) was manipulated. This study conducted an online experiment with a total of 60 final participants.FindingsThe results reveal that textual disclosure of CI influences millennials’ financial decisions. This study also discovered that millennials’ financial decisions are unaffected by graphical displays of financial data as they place greater importance on textual financial data, particularly on CI representations, when making financial decisions.Research limitations/implicationsMillennials are financial users who apply different financial analysis and judgement strategy from their predecessor. They value textual disclosure and CI when analysing firms’ performance.Originality/valueThis study contends that millennials are the financial users who will use analytical strategies while making financial decisions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Web Information Systems Emerald Publishing

Representation and value relevance of net income versus comprehensive income on millennials’ financial decision-making

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References (64)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1744-0084
eISSN
1744-0084
DOI
10.1108/ijwis-10-2021-0117
Publisher site
See Article on Publisher Site

Abstract

Financial representation research has gained considerable attention among researchers. The argument is on representation preferences and the effect of graph versus text representation of financial data. The display format for net income (NI) and comprehensive income (CI) has been proven to influence users’ financial decision-making process, depending upon users’ characteristics. It is worth noting that millennials are users whose characteristics and cognitive skills differ from those of preceding generations. This study aims to unravel millennials’ preferences for the earnings information and representation when making financial analysis and judgement, thus providing insight on their decision-making strategy, either perceptual or analytical.Design/methodology/approachThis study used a 2 × 2 full factorial of experimental design, in which the financial representation in the following two ways: the textual disclosure content (NI versus CI) and the graphical display content (NI versus CI) was manipulated. This study conducted an online experiment with a total of 60 final participants.FindingsThe results reveal that textual disclosure of CI influences millennials’ financial decisions. This study also discovered that millennials’ financial decisions are unaffected by graphical displays of financial data as they place greater importance on textual financial data, particularly on CI representations, when making financial decisions.Research limitations/implicationsMillennials are financial users who apply different financial analysis and judgement strategy from their predecessor. They value textual disclosure and CI when analysing firms’ performance.Originality/valueThis study contends that millennials are the financial users who will use analytical strategies while making financial decisions.

Journal

International Journal of Web Information SystemsEmerald Publishing

Published: Oct 31, 2022

Keywords: Graph; Textual; Net income; Comprehensive income; Millennials; Income

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