Representation and value relevance of net income versus comprehensive income on millennials’ financial decision-making
International Journal of Web Information Systems
ISSN: 1744-0084
Article publication date: 12 April 2022
Issue publication date: 31 October 2022
Abstract
Purpose
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/approach
This 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.
Findings
The 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/implications
Millennials 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/value
This study contends that millennials are the financial users who will use analytical strategies while making financial decisions.
Keywords
Acknowledgements
This research was sponsored by the Ministry of Education, Malaysia, under the scheme of SLAB/SLAI.
The authors thank Professor Dr William Dilla, Department of Accounting, IOWA State University, for sharing his experimental materials and allowing the authors to use the materials adopted in this study. The authors are grateful for his kind help and support in this study.
Citation
Amirul, S.M., Che Azmi, A. and Jaafar, N.I. (2022), "Representation and value relevance of net income versus comprehensive income on millennials’ financial decision-making", International Journal of Web Information Systems, Vol. 18 No. 4, pp. 197-216. https://doi.org/10.1108/IJWIS-10-2021-0117
Publisher
:Emerald Publishing Limited
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