Does Information Traffic Matter to Accounting Information Usefulness? Evidence from Internet Search Data

Abstract

Accounting information can generate economic and social welfare effects through its various impacts on the investor community and the function of the capital market. How to improve the usefulness of the information has long been one of the major concerns of accounting policy makers. This study initiates the concept of information traffic to capture investors’ online keyword information search frequency and explore whether such search frequency contains any ability to predict the usefulness of accounting information. The investigation of information traffic on 59 accounting and accounting-derived information items reveals that information items with more traffic (i.e., higher online users’ search frequency) are associated with higher observed usefulness. Further analysis yields results that indicate varying traffics associated with different information categories, which provides explanations for the cross-category variation in observed usefulness. The proposed integrated measure of information traffic and usefulness suggests an order in importance of the 10 information categories we investigate from standard setting’s point of view. Dynamics analysis of information traffic sheds light on the understanding of changes in investor information interest and need. This study suggests a new angle for accounting policy makers and researchers to understand and further improve the usefulness of accounting information.