Conducting an experiment Theresa Herrmann investigates why nonprofessional investors fail to
incorporate disclosures on fair value estimates into their investment decision and what causes
this exclusion. Differentiating between different types of disclosures and the development of
the fair value (gain vs. loss) the results indicate that with a fair value gain none of the
disclosure information increases decision usefulness irrespective of the presentation format.
When a fair value loss occurs fair value disclosures presented in a salient presentation
format decrease decision usefulness. Thus investors have varying information needs that are
strongly linked to the development of a firm's key asset.
