Does financial statement presentation in 10-K filings matter?

Abstract

I explore two novel characteristics of financial reporting, the order in which the financial statements are presented in the annual 10-K filing (financial statement order or FSO) and the number of times financial statements are mentioned in the 10-K (financial statement mentions or FSM). In this study, I explore the determinants of FSO and FSM signals for the income statement. Additionally, I provide evidence that FSO and FSM income statement signals are related to characteristics of earnings. In particular, I show that FSO and FSM are related to the persistence of earnings and the weights on earnings and book value in valuation. I also show that earnings response for future earnings is related to FSM. Overall, I show that FSO and FSM are related to earnings and valuation properties and may be one method managers can communicate relevant information about earnings.