The expectations‐performance gap in financial reporting from the perspective of Hong Kong bank loan officers

Yew Jen, Marian WU TONG, Man Ching, Gladie LUI, Yee Hong, Albert LEW

Research output: Journal PublicationsJournal Article (refereed)peer-review


This paper seeks to provide empirical evidence showing how bank users of audited financial statements perceive and interpret various dimensions associated with financial reporting in Hong Kong. Employing a survey instrument, we asked bank loan officers to rank the importance of thirty‐five reporting dimensions for lending decisions and to ascertain their expected level of information on each exploratory dimension, as well as their perceptions of the level of information actually provided by audited financial statements. Reliance on principal‐component analysis to extract a set of important dimensions shows that nine reporting dimensions are significantly associated with lending decisions. When bank loan officers' levels of expectations on important reporting dimensions were compared with the corresponding levels of perceived reporting performance, the statistical results reflect the existence of an expectations‐performance gap. Finally, when bank loan officers' perceived levels of reporting performance were hierarchically positioned, audited financial statements were found to provide the most information on a firm's liquidity and profitability, moderate information on reliability‐related dimensions, and the least information on relevance‐related dimensions pertaining to the future prospects of a firm. This empirical evidence signifies the need for future corrective actions in closing the expectations‐performance gap.
Original languageEnglish
Pages (from-to)1-22
Number of pages22
JournalPacific Accounting Review
Issue number1
Publication statusPublished - 2002

Bibliographical note

The authors would like to thank Professors Hung Chan, Kung H. Chen, Daniel W.W. Cheung, Herbert Jensen, Phyllis Mo, John Talbott, and two anonymous reviewers for their insightful comments on an earlier draft of this manuscript. The project was partially funded by a Direct Research Grant of the Chinese University of Hong Kong.


Dive into the research topics of 'The expectations‐performance gap in financial reporting from the perspective of Hong Kong bank loan officers'. Together they form a unique fingerprint.

Cite this