Is Financial Reporting Still Useful? Australian Evidence
Michael Davern, Nikole Gyles, Dean Hanlon, Matthew Pinnuck
Abacus | Wiley | Published : 2019
There has been recent and growing criticism of the usefulness of financial reporting for investors, particularly the annual financial statements. In response, the IASB is pursuing several projects aimed at improving the relevance of financial information. To inform the IASB’s work, we investigate, using a mixed‐method approach, the extent and nature of the use of annual financial statements by equity investors. We examine the relevance of financial reporting for equity valuation in Australia across time. We find that financial reporting (specifically, reported net income, shareholders’ equity, and operating cash flows) remains relevant for investment decisions. We further support this findin..View full abstract
The authors gratefully acknowledge funding provided by CPA Australia. The authors would like to thank the interview participants.