Date of this Version


Document Type

Discussion Paper

Publication Details

Keith Duncan and Ray McNamara (1992) Syntax of Consolidated Financial Statements: The Impact on Credit-Manager's Decision Making

Acknowledgements: Comments on earlier drafts by seminar participants at the University of Southern California (Feburary, 1991) and the AAANZ Conference, Brisbane (July, 1991), have benefited the paper. The authors would also like to thank Helen Smith who was involved in the data collection and analysis phases of the project.

School of Business Discussion Paper ; No. 35, Jun. 1992

© Copyright Keith Duncan, Ray McNamara and the School of Business, Bond University


A loan decision experiment was designed to test whether or not the decisions of users of consolidated financial statements differed when the accounts are prepared using the economic entity, the parent company and the narrow economic entity approaches. Credit managers evaluated the semantic meaning of three treatment company financial statements (prepared under the three consolidation approaches). They also stated the level of loan they would grant each company. The analysis shows that credit-managers react differently depending on how the consolidated information is presented. The experiment does not show which method is 'correct', only that credit-granting decisions are affected by the choice of consolidation method.