Abstract
Conventional financial statements present quantitative financial information about an entity in the form of single point estimates. Accordingly, they do not include a quantitative measure of the uncertainty inherent in these point estimates. In this paper, I present the results of a study which attempted to determine the effect of a quantitative measure of uncertainty on a sample of commercial bank loan decisions. Traditionally, the commercial bank loan officer has used financial statements to evaluate the risk of a loan. Evidence on the usefulness of financial statements in this regard has been provided by Beaver [1966; 1968] and Altman [1968], among others. The point of issue in this study, however, is whether a quantitative measure of the uncertainty in accounting numbers, such as a confidence interval, influences a loan officer's evaluation of the risk associated with a loan.1
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
