I do believe that companies should be required to report the
impact of changes even if they impact multiple periods. Reporting this
could change how many investors invest in the company and how
much they invest. If a company knows, or suspects, that a change may
have a negative impact then it would be unethical for the company
not to disclose that information to current and potential investors.
a Many investors will make decisions with little information to go
on, so long as they can see that the company is profitable. On the
other hand, many banks, and other commercial lenders, like to have
as much information as possible to gauge how likely it is that they will
get their money back, so not disclosing changes with multiperiod
impacts can be a major factor on if they are willing to provide a
company with funds.
a The article suggests that “investors exhibit some forgetting
regardless of whether they had longer or shorter delays”, and while
this may be true, I still believe that it would be more ethical to
disclose and the investors forget than to not disclose at all.
Reference
Emett, S. A., Nelson, M. W., (2017). Reporting Accounting Changes
and Their Multi-Period Effects. Accounting, Organizations and
Society, Volume 57, Pages 52-72, ISSN 0361-3682,
https://doi.org/10.1016/j.aos.2017.03.002
