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The ExpectationsPerformance Gap in Financial Reporting from the Perspective of Hong Kong Bank Loan Officers

The ExpectationsPerformance Gap in Financial Reporting from the Perspective of Hong Kong Bank... This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting in Hong Kong. Employing a survey instrument, we asked bank loan officers to rank the importance of thirtyfive reporting dimensions for lending decisions and to ascertain their expected level of information on each exploratory dimension, as well as their perceptions of the level of information actually provided by audited financial statements. Reliance on principalcomponent analysis to extract a set of important dimensions shows that nine reporting dimensions are significantly associated with lending decisions. When bank loan officers' levels of expectations on important reporting dimensions were compared with the corresponding levels of perceived reporting performance, the statistical results reflect the existence of an expectationsperformance gap. Finally, when bank loan officers' perceived levels of reporting performance were hierarchically positioned, audited financial statements were found to provide the most information on a firm's liquidity and profitability, moderate information on reliabilityrelated dimensions, and the least information on relevancerelated dimensions pertaining to the future prospects of a firm. This empirical evidence signifies the need for future corrective actions in closing the expectationsperformance gap. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

The ExpectationsPerformance Gap in Financial Reporting from the Perspective of Hong Kong Bank Loan Officers

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0114-0582
DOI
10.1108/eb037962
Publisher site
See Article on Publisher Site

Abstract

This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting in Hong Kong. Employing a survey instrument, we asked bank loan officers to rank the importance of thirtyfive reporting dimensions for lending decisions and to ascertain their expected level of information on each exploratory dimension, as well as their perceptions of the level of information actually provided by audited financial statements. Reliance on principalcomponent analysis to extract a set of important dimensions shows that nine reporting dimensions are significantly associated with lending decisions. When bank loan officers' levels of expectations on important reporting dimensions were compared with the corresponding levels of perceived reporting performance, the statistical results reflect the existence of an expectationsperformance gap. Finally, when bank loan officers' perceived levels of reporting performance were hierarchically positioned, audited financial statements were found to provide the most information on a firm's liquidity and profitability, moderate information on reliabilityrelated dimensions, and the least information on relevancerelated dimensions pertaining to the future prospects of a firm. This empirical evidence signifies the need for future corrective actions in closing the expectationsperformance gap.

Journal

Pacific Accounting ReviewEmerald Publishing

Published: Jan 1, 2002

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