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. However, we also find that in some circumstances financial statement disaggregation may not be beneficial to investors and that the resultant increase in cognitive load may outweigh any benefits of financial statement interactivity. These results have important and timely implications for standard setters considering whether to require increased disaggregation in financial statement reporting and companies seeking to enhance the usefulness of their web-based financial reports.
JEL Classifications: C91; G11; G18; M41.
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