Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257580 
Year of Publication: 
2022
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 13 [Issue:] 1 [Article No.:] 3 [Publisher:] MDPI [Place:] Basel [Year:] 2022 [Pages:] 1-14
Publisher: 
MDPI, Basel
Abstract: 
This study investigates the effect on nonprofessional investors' judgements and decisions of discretionary measurement choices. Using a paper-and-pencil experience, we collect and analyze information regarding investment amounts as well as past and future financial performance judgements of firms' earnings by manipulating fair value (mark-to-market and mark-to-model) criteria and benchmarking it with historical cost-based financial statements. We proxy nonprofessional investors with graduate students from a business school. Our results show evidence that nonprofessional investors view fair value changes as permanent. We argue for a cashflow volatility factor. Contrary to previous research, we do not find evidence of any effect on investors' willingness to invest (average budget amounts invested) or performance judgments (past and future). We corroborate previous evidence that investors rank measurement concepts' relevance differently for different classes, although, on average, mark-to-market fair values and historical cost are rated more relevant and reliable than mark-to-model fair values.
Subjects: 
fair value
judgement and decision
mark-to-market vs. mark-to-model
measurement theory
nonprofessional investors
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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