The Use of Interactive Data Views in Corporate Financial
Reporting
The Use of Interactive Data Views in Corporate Financial
Reporting
Diane J. Janvrin
ISU Accounting Finance Research WorkshopMay 4, 2009
Thanks to Bill Dilla and Robyn Rasche (UNLV) for helpful discussions, Mike Doran for assistance in data collection, Andrea Biagolni, Courtney Ekeler, Leslie Pease, and Pat Wagaman for material preparation assistance.
OverviewOverview
Motivation Research Questions Methodology Preliminary Results Discussion/Conclusion
Interactive Data ViewsInteractive Data Views
Process of allowing users to select presentation format and type of information they find as most relevant
Allows users to disaggregate financial statement information and select only the information they view as most relevant.
Some allow users to perform selected calculations
Interactive Data ViewsInteractive Data Views
May help decision makers overcome information overload by reducing large data sets into simple visuals
Shifts cognitive load to the human perceptual system through graphics
Key TermsKey Terms
Visual representation– Selection, transformation, and presentation of data
(including spatial, abstract, physical, or textual) in a visual format that facilitates exploration and understanding (Lurie and Mason 2007)
Visualization tools – Intermediate step in converting data into insight – Data characteristics such as dimensionality, scale
(categorical, ordinal, and metric) and cardinality (binary vs massively categorical variables) affect which tools are appropriate.
Categories of Information Visualization (Yi et al. 2007)Categories of Information Visualization (Yi et al. 2007)
Select – Mark data item as interesting
Explore– View other data items
Reconfigure– View different arrangement of data
Encode– View different representation of data
Abstract/Elaborate– View data in more or less detail
Filter – View data conditionally
Connect– View related items of data
Visualization ToolsVisualization Tools Early use in genetics and biology Business applications lag the sciences by as
much as 10 years (West 1995) Today, used in marketing efforts (Lurie and
Mason 2007) Beginning to see usage in external financial
reporting – maybe internal reporting
IDV ExamplesIDV Examples
SEC web site– Executive Compensation – Interactive Financial Reports
• http://viewerprototype1.com/viewer
– Financial Explorer • http://209.234.225.154/viewer/home/
Corporate web sites– Stock price information
• http://www.ford.com/about-ford/investor-relations/investment-information/stock-chart
– Enumerate - financial and non-financial information• http:///www.enumerate.com• http://production.investis.com/bp2/ia/annualdata2007/
Corporate Web site – Financial and non-financial informationCorporate Web site – Financial and non-financial information
Corporate Web site – Financial and non-financial informationCorporate Web site – Financial and non-financial information
Data transformationsData transformations Potentially affect the ultimate insights derived
from the data The problem
– visual representations may allow users to see patterns and outliers easier, make certain information more salient and other information less salient, and show detailed information on specific alternatives (i.e. improve decision quality)
– however, visual representation may accentuate biases in decision making and lower performance by increasing attention to particular attributes or less diagnostic information
Current ResearchCurrent Research
Exploratory study examining whether nonprofessional investors perceive that IDVs present – unaudited information– distorted information
Second study examining whether viewing distorted changes in financial information in IDV format impacts nonprofessional investor judgment
Exploratory StudyExploratory Study
Examines issues (i.e. unaudited information / distorted information ) raised by the Pozen Committee (SEC 2008)
Examines perceived system quality (Ahn et al. 2007)
Presentation of Unaudited InformationPresentation of Unaudited Information
Important issues related to presentation of financial information using IDVs– Should assurance be provided by a third
party?– If not, should financial statement preparers
indicated information is unaudited?– Do users realize presented information is
unaudited? • Hodge 2001 found answer is no
Research Questions – Presentation of Unaudited Information
Research Questions – Presentation of Unaudited Information
RQ: Do investors perceive that IDVs present unaudited financial information?
Presentation of Distorted InformationPresentation of Distorted Information
Some IDVs may distort the underlying financial information– SEC Financial Explorer atomic models– Will user decisions be impacted by distorted
financial information? • Arunachalam et al. 2002 found yes
Research Questions – Presentation of Distorted Information
Research Questions – Presentation of Distorted Information
RQ: Do investors perceive that IDVs present distorted financial information?
First StudyFirst Study
154 students enrolled in intermediate accounting or accounting information systems at large public university
Examined four IDVs Provided responses to general statements
based on issues raised by the Pozen Committee (SEC 2008) and technology acceptance statements regarding perceived system quality (Ahn et al. 2007)
Second StudySecond Study
Examines whether viewing distorted changes in financial information in IDV format impacts nonprofessional investor judgment
Second StudySecond Study
154 students enrolled in accounting information systems at large public university
20 CPAs attending continuing education session Trained to use SEC Interactive Financial Explorer IDV Examined nine scenarios involving IDVs
– Financial information displayed: revenue, expenses, and income– All components increased, decreased, varied
In each scenario, one IDV displayed the change in financial information appropriately and one IDV distorted the change in financial information
Based on this limited information, participants were asked to make an investment decision
Sample ScenarioSample Scenario
Income greater– https://www.bus.iastate.edu/djanvrin/IDV/part2inco
megreater.asp Income smaller
– https://www.bus.iastate.edu/djanvrin/IDV/part2incomesmaller.asp
Income varied– https://www.bus.iastate.edu/djanvrin/IDV/part2inco
mevaried.asp
Summary Implications for General Decision Making
Summary Implications for General Decision Making
Visualization has potential to offer decision makers ways to – improve efficiencies– reduce costs– gain new insights– make data more accessible– increase satisfaction
At same time, visualization may accentuate biases in decision making
Implications for Financial Statement PreparersImplications for Financial Statement Preparers
Rendering issues
Do you present audited or unaudited information?
Materiality at data level
Implications for Financial Statement AuditorsImplications for Financial Statement Auditors
Is audited information presented?
How do users determine if information is audited? i.e., disclaimer or presence of audit report?
Materiality at data level
Implications for Financial Statement UsersImplications for Financial Statement Users
Provides data in preferred format (i.e., table, graph, or both)
Allows user to view only the data user determine is relevant
Facilitates comparison – between companies– between periods– between divisions / products
May accentuate biases; highlight less relevant information