Abstract:
We conduct an experiment to investigate the potential benefits of an alternative format for
the income statement, the matrix format, initially developed by the IASB and UK ASB in
their joint project on performance reporting. Sophisticated financial statement users (financial
analysts and professional accountants) and less sophisticated financial statement users (MBA
students) were asked to extract information from a set of financial statements that included an
income statement either in the IAS 1 format or in the matrix format. We find that the matrix
format improves the accuracy with which users extract financial information. This result is
driven by greater accuracy, for all user groups, on ‘belowtheline’
items. Furthermore,
despite lack of familiarity with the matrix format, its use did not appear to affect the time
taken, the ease of extracting financial information, or users’ task completion confidence;
further experience with the matrix format could lead to benefits along these lines as well. Our
findings may assist the FASB and IASB in their joint project on financial statement
presentation.