An Investigation Of The Effect Of Reporting Changes Proposed By The AICPA On Lending Decisions

Abstract

In 1994, a Special Committee of the AICPA proposed to expand and reorganize financial statements. The main differences between the proposed model and current GAAP include increased segment information, a separation of core and non-core activities, and inclusion of more forward-looking information. This study examines the effect of the proposed changes on lending decisions made by bankers. The results indicate that the separation of financial statement data into core and no-core activities provides relevant information in making lending decisions. Combining core activity separation with expanded segment information further increases the decision usefulness of the statements.