An application of protocol analysis to the "Little GAAP" controversy

Abstract This paper discusses a research project designed to collect evidence related to the “Little GAAP” controversy which the FASB and AICPA are currently examining. A protocol analysis methodology was used to collect and analyze data about the usefulness to bank loan officers of four types of financial statement information for smaller, closely held companies: earnings per share, deferred income taxes, capitalized leases, and inflation adjusted information. The usefulness of the information was measured in descriptive terms as the use of that information to make a specific loan decision. An effort was made to use analytical procedures similar to those in previous studies in the area so as to maximize comparability. However, the results of the analyses were reported in a modified format. The new format provides additional information and increases the objectivity of the results.