FACTORS AFFECTING PERCEIVED USEFULNESS OF INFORMATION DISCLOSED IN FINANCIAL REPORTS IN INVESTMENT DECISION

Abstract

This study investigates the influence of qualitative characteristics of financial reports on their perceived usefulness for individual investors, based on the conceptual framework defined by the International Accounting Standards Board (IASB). It focuses on two fundamental characteristics—relevance and faithful representation—and two enhancing characteristics—understandability and comparability. The research employs a descriptive design, utilizing primary data collected through a self-administered structured questionnaire, with a sample size of 257 participants. Data analysis was conducted using SPSS and MS Excel, employing descriptive statistics, correlation, and regression analysis. The findings reveal that all four qualitative characteristics significantly influence the perceived usefulness of financial reports, particularly in investment decision-making, portfolio monitoring, and analyzing future opportunities. Among the factors, comparability and faithful representation have the greatest impact, while relevance has the least. The study highlights that users prioritize comparable and credible information in financial reports for their decision-making process. Additionally, the study observes that financial reports often lack forward-looking information and adequate disclosure of corporate governance practices, which are crucial for informed decision-making. It also finds that users value the organization and presentation of data, such as graphs and tables, which are easily understandable. Overall, the study concludes that individual investors consider understandability and comparability as the most influential qualitative factors in the perceived usefulness of financial reports.