Abstract First, the evidence indicates that investors who used only price-level restated or both price-level restated and conventional financial statements did not make forecasts different from those made by investors who used only conventional in- formation. With the exception of period 4, the isolated differences which did appear between the forecasts of the groups were attributed to chance. With respect to period 4, the evidence did reveal forecasting differences among the groups. Two possible explanations for this occurrence were considered. The information content explanation suggests that differences in forecasts occurred only in period 4 because this was the only period in which investors made a sufficiently thorough comparative analysis of the combined statements. However, analysis to the extent possible within the research design could not validate this explanation. An alternative explanation, called the shock effect explanation, attributes the period 4 differences to the shock of the initial decision experience and holds that the forecast differences had nothing to do with any differences between the conventional and price-level restated statements. This explanation does seem to be in accord with most of the evidence. Second, the evidence indicates that neither the users of the restated statements nor the users of the combined statements made decisions different from those made by the users of the conventional statements.
James A. Heintz (Mon,) studied this question.