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Market reactions to differentially available information in the laboratory

Article Abstract:

A study was conducted to find out if differential availability of information has an impact on prices in laboratory markets. Particularly, it aimed to ascertain if an increase in market prices can be observed if unfavorable information is less widely available. Results showed that there is a stronger reaction in laboratory markets to information that is available to more investors. The intensity of this impact rises when the total amount of widely available information becomes smaller. Findings also revealed that there are underreactions to nonearnings financial statement information. Lastly, the study indicated that changes in disclosure location can influence prices even without additional effects if these changes have an impact on information availability.

Economics, Corporation reports, Company reports, Information theory, Information theory in economics

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The effect of experience on auditors' memory errors

Article Abstract:

Two types of auditors' memory errors, the failure to integrate and reconstruction, were investigated. The failure to integrate is the failure to make mental connections between different pieces of information, while reconstruction is the alteration of the mental representation of knowledge to make it compatible with existing knowledge. Research entailed having auditors review contradictory model work papers. Research results revealed that auditors with all levels of experience committed memory errors, and errors in both the failure to integrate and reconstruction were linked to experience. The failure to integrate was displayed most by inexperienced auditors, while reconstruction was displayed more by experienced auditors.

Analysis, Auditing, Memory, Auditors, Experience

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