Communicating Measurement Uncertainty: An Experimental Study of Financial Reporting Implications for Managers and Investors

I conduct an interactive experiment with participants in manager and investor-like roles to examine whether and how mandating range disclosures for uncertain estimates will influence managers’ reporting decisions. I find that managers report less aggressively when ranges are disclosed, such that investors have little aggressive reporting to identify using range disclosures. However, consistent with psychology theory, range disclosures have the...