The Effectiveness of Graphics in Disclosing Quantitative Information on Market Risk: An Experimental Investigation

Abstract

The effectiveness of graphics in disclosing quantitative information on market risk is examined using an experimental study. Two groups of postgraduate students are presented with an extract of a firm's annual report containing information on market risk. One group of subjects are presented with purely narrative disclosure, the other with a narrative disclosure supplemented with a graphical display. The results from the experiment demonstrate the superiority of graphical supplemented market risk disclosure format over purely narrative on four factors; predictive accuracy, confidence level of the prediction, task easiness and report comprehensibility.