A loan decision experiment was designed to test whether or not the decisions of users of consolidated financial statements differed when the accounts are prepared using the economic entity, the parent company and the narrow economic entity approaches. Credit managers evaluated the semantic meaning of three treatment company financial statements (prepared under the three consolidation approaches). They also stated the level of loan they would grant each company. The analysis shows that credit-managers react differently depending on how the consolidated information is presented. The experiment does not show which method is 'correct', only that credit-granting decisions are affected by the choice of consolidation method.
Available at: http://works.bepress.com/keith_duncan/1/