Iowa State University
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News Service

News Service:

Annette Hacker, director,
(515) 294-3720

Office: (515) 294-4777

4-18-07

Contacts:

William Dilla, Accounting, (515) 294-1685, wdilla@iastate.edu

Diane Janvrin, Accounting, (515) 294-9450, djanvrin@iastate.edu

Cynthia Jeffrey, Accounting, (515) 294-9427, cjeffrey@iastate.edu

Dan Ryan, College of Business, (515) 294-5800, djr@iastate.edu

Mike Ferlazzo, News Service, (515) 294-8986, ferlazzo@iastate.edu

Saturday Veishea crowd offers research opportunity for three ISU accounting professors

AMES, Iowa -- Saturday's Veishea activities at Iowa State University -- which include the annual parade and the official kickoff to the year-long sesquicentennial celebration -- are expected to bring thousands back to campus.

While many see the day as a celebration, three ISU accounting faculty see it as an opportunity to conduct research on a large and diverse sample. They plan to survey investors in the crowd for a study on how graphical displays affect investor judgments.

Professors William Dilla, Diane Janvrin, and Cynthia Jeffrey will be conducting an online investing simulation Saturday in the Gerdin Business Building, just east of the Sesquicentennial Veishea Village on central campus. The simulations will take place during 30-minute sessions that run every half-hour from 12:30 until 4 p.m.

Participants are asked to gather in the main lobby on the first floor of the Gerdin Business Building. There will be signs to guide participants into the building and the meeting area.

All participants will receive a small gift for their time. They will also be eligible for drawings for Iowa State University Bookstore gift certificates. Participation is completely voluntary and open to anyone over the age of 18. All data collected will be kept confidential.

Dilla, Janvrin, and Jeffrey are researching the effects of providing investors with interactive displays of non-Generally Accepted Accounting Principles (GAAP), or "pro forma," earnings.

"The Securities and Exchange Commission regulates the textual content of pro forma earnings disclosures, requiring reconciliation to GAAP figures," said Dilla. "But there is currently no regulation specifying how these reconciliations are presented. This is especially true for the online environment, where users may have to click on hyperlinks to access reconciliations, instead of viewing all the financial information on a single page."

While there has been considerable research into the effects of text format pro forma disclosures on investor judgments, the effects of interactive online displays are not yet known, according to Dilla.

Using software provided to Iowa State's accounting department by special agreement with Enumerate -- a leading developer of interactive analysis products -- the researchers have worked with a team of students to develop a simulated investor relations' Web site. Accounting and MIS undergraduate honors student Sarah Swanson and master of accounting student Rick Wernimont provided design assistance for their undergraduate honors project and masters' creative component, respectively. Computer engineering undergraduate student Nick Jensen programmed the web site.

Dilla said that the simulated Web site contains financial information both in conventional text and interactive formats. Study participants log on to the simulated Web site, view financial information, then give their judgments about the hypothetical company's earnings and investment potential. The experiment software not only records participant responses, but also tracks the amount of time they spend looking at various items of information.

"To date, three groups of individuals have participated in the study: senior accounting undergraduate students, graduate students who have recently studied the concept of pro forma earnings in depth, and professional analysts and investors," said Dilla. "Our Veishea event data collection will involve a fourth group -- everyday investors who may or may not have substantial finance and accounting experience."

Please call (515) 294-1685 with any questions, or for more information.

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William Dilla

William Dilla

Quick look

Professors William Dilla, Diane Janvrin, and Cynthia Jeffrey will be conducting an online investing simulation Saturday in the Gerdin Business Building, just east of the Sesquicentennial Veishea Village on central campus. The simulations will take place during 30-minute sessions that run every half-hour from 12:30 until 4 p.m.

Quote

"To date, three groups of individuals have participated in the study: senior accounting undergraduate students, graduate students who have recently studied the concept of pro forma earnings in depth, and professional analysts and investors. Our Veishea event data collection will involve a fourth group -- everyday investors who may or may not have substantial finance and accounting experience."

William Dilla, Iowa State associate professor of accounting