Non-Financial Performance Indicators (R&D) Impact on Individual Investors' Decision Making

Book excerpt: Special committee of the AICPA on financial reports has urged disclosure of related non-financial performance measurers and forward-looking information to addition customary financial reports (AICPA, 2002). This study shows an experiment that examines whether additional disclosure of non-financial performance measurement (R&D) impact on individual Investors' net earnings estimates. An experiment was directed applying investors who were prepared with a hypothetical firm's annual report. The experiment presented to include two levels (additional disclosure positive non-financial performance (R&D), negative non-financial performance (R&D) 1 (financial statements only as control group) between-subjects design. The individual investors with high education and knowledge reacted to the negative and positive information, as anticipated from the prior research. The results show that the value of positive additional disclosure of non-financial performance (R&D) may not overflow in an equal manner to all users of financial statements. It also indicates that regulatory intervention to additional disclosure to all investors may not have the desired effect if cognitive biases, and lack of task-specific knowledge, adversely affect their decision-making. I provided in advance proof on disclosures that can help individual investors. When my experiment sets convergent proof of the impact of these disclosures in a controlled setting, in addition, it prepares fresh proof that the differences in investors' appraisals are probably involuntary, caused by reminder bound. This study found that additional disclosures non-financial performance (R&D) improve individual investors decision making, although these disclosures are superfluous with data in the initial financial reports.