Individual investors' risk judgments and investment decisions: the impact of accounting and market data

Article Abstract:

A micro study of the effects of accounting information on investors was conducted. Specifically, it examined how the risk judgments and investment decisions of individual investors are influenced by accounting risk measures and market information contained in the portfolio theory, including variance and covariance of returns with the market return. Findings revealed that respondents perceived different levels of variance as well as covariance of returns although they usually employed only variance in risk assessment. Covariance was found not to have an impact on investment choices while variance was demonstrated to influence investment choices. Moreover, results revealed that risk judgments are more linked to accounting information than to market data in cases where the two types of information contradict each other.

Investments, Investors

---

Report format and task complexity: interaction in risk judgments

Article Abstract:

The effects of internal audit report format (graphic vs. tabular presentation of data) and task complexity on two elements of the decision-making process, decision accuracy and decision bias, are studied. Accuracy is the ability to differentiate between high and low risk audit reports, while bias is the sensitivity to the importance of decision results. A group of internal auditors judged the error potential in 70 audit reports. The results indicate that there is a significant relationship between report format, task complexity, and decision accuracy and bias. For relatively simple reports, graphic rather than tabular data enhance accuracy and bias. For complex reports, tabular data improve accuracy and bias.

Financial statements, Internal auditing, Managerial accounting, Controllership

---

Inherent risk: an investigation of auditors' judgments

Article Abstract:

Auditors' judgment of inherent risk is important because it is a substantial part of the audit risk model, and because control risk is a function of inherent risk level. Assessment of inherent risk therefore relates directly to the timing, amount, and degree of audit procedures on both audit effectiveness and efficiency. Four inherent risk factors are analyzed: controller turnover, financing pressure, complexity of inventory overhead, and personnel quality. Results indicate that all four inherent risk factors are significant to auditors, but that quality of personnel is the most significant of all.

Management, Accounting and auditing, Inventory control, Auditors

Similar abstracts:

• Abstracts: Dwelling in the tents of wickedness: the future of accounting education. The CA in the 1990s - An Invitation to Readers
• Abstracts: Moral hazard and adverse selection: the question of financial structure. Managerial preference, asymmetric information, and financial structure
• Abstracts: Inflation, uncertainty, and investment. The valuation of cash flow forecasts: an empirical analysis. Inflation and asset returns in a monetary economy
• Abstracts: Audit fees and auditor size: further evidence. An empirical analysis of audit delay. The effects of alternative justification memos on the judgments of audit reviewees and reviewers
• Abstracts: Impact of country-of-origin cues on consumer judgments in multi-cue situations: a covariance analysis. Consumer attitudes toward Canadian-made versus imported products

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.