An Experimental Study on Presentation Format Effect of Income Statement: Evidence from a Modified Ultimatum Bargaining Game Experiment

Abstract

In this paper, we have considered whether accounting disclosure format would affect decision-making of investor by experiments. We have two research questions. The First question is whether decision-making of investors would be different when the source of corporate income is presented or not. The second question is whether decision-making of investors would be different when corporate income earned by operating activities or financial activities is presented. Our experiments proved the presentation format effect on income statement. The result shows that investors would see the source of income when they decide, so presentation format in financial statement is very important. The results of these experiments will change the direction of the entire study of disclosure of accounting information.