The Effect of an Analysis of Expense by Nature or by Function on Investors' judgment

Abstract

The study aims to investigate the effect of an analysis of expenses by nature and by function on judgments of investors in firm valuation. The results demonstrate that the presentation of expenses by nature can enhance judgmental capability of investor in the assessment of firm financial performance in both breadth and depth. The results also indicate that the location of the presentation of an expense analysis by nature affects the investors’ judgment on overall firm performance evaluation and forecast.