Research on Disclosure

Because the number and complexity of disclosure requirements have grown, the size of annual financial reports has increased considerably in recent years. In Statement 105, the Financial Accounting Standards Board cited 4 major purposes for disclosure: 1. to describe and provide relevant measures of recognized items other than the measure in the financial statements, 2. to describe and provide a useful measure of unrecognized items, 3. to provide information to help investors and creditors assess risks and potentials of both recognized and unrecognized items, and 4. to provide important information in the interim while other accounting issues are being examined in more depth. Potential research questions include: 1. When is disclosure an adequate substitute for recognition in financial statements? 2. Which method incurs less cost? 3. What disclosure information do various classes of users find most important? 4. How does the increasing use of databases in financial analysis affect disclosure requirements?