Information order effects in the context of management commentary—initial experimental evidence

Theis, Jochen; Yankova, Kristina; Eulerich, Marc

doi:10.1007/s00187-012-0160-0

Cited by 15 publications

(17 citation statements)

References 23 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Our results support the presence of recency effect of information order using complex (less readable) disclosures, where when the disclosures are complex and difficult to read, non-professional investors' judgments are affected by the last information presented in the report. The results are consistent with Hogarth and Einhorn (1992) BAM, Theis et al (2012) which find a recency effect of information order in management commentary and Hellmann et al (2017) which find also a recency effect of information order in management reports. In addition, the results are consistent with that of Pinsker (2011) which shows a recency effect of information order, while using long series of information in both end-of-sequence and step-by-step information pattern.…”

Section: Experiments 2 (Results Of Testing H2a and H2b)supporting

confidence: 89%

“…Second, the experiments require general decision-making behavior, in an investing context and do not require advanced financial analysis for taking decisions. Therefore, accounting and finance senior undergraduate students have sufficient knowledge, enabling them to just (Baird and Zelin, 2000;Daigle et al, 2015;Dilla et al, 2013;El-Gazzar et al, 2018;Hellmann et al, 2017;Pinsker, 2011;Rafay and Farid, 2018;Tan et al, 2015;Theis et al, 2012). As a basic requirement, participants are local undergraduate accounting and finance students in their final year in the university and are selected from the classes of Graduation Projects.…”

Section: Participantsmentioning

confidence: 99%

See 1 more Smart Citation

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

El-Sayed

Adel

Elmougy

et al. 2020

JAAR

View full text Add to dashboard Cite

PurposeThis study examines whether manipulation in attributes of corporate narrative disclosures and the use of graphical representations can bias non-professional investors' judgment towards firms' future performance, in an emerging market context.Design/methodology/approachThe authors conduct three different experiments with a 2 × 2 between-subjects design, using accounting and finance senior undergraduate students to proxy for the non-professional investors.FindingsResults show that simple (more readable) disclosures improve non-professional investors' judgment towards firms' future performance. In addition, it is found that non-professional investors are prone to a recency effect from the intentional ordering of narrative information, when using complex (less readable) narratives. However, no primacy effect is found, when using simple (more readable) disclosures. The results further provide evidence that the inclusion of graphical representations, along with the manipulated narrative disclosures, can moderate the recency effect of information order, when using less readable and complex narrative disclosures.Research limitations/implicationsThe results reveal that although the content of corporate disclosures can be objective, neutral and relevant, manipulation in textual features and the use of graphical presentations, can interact to impact how non-professional investors perceive and process the disclosed information. This study provides an Egyptian evidence regarding this issue, as the majority of prior studies concentrate on developed capital markets. In addition, it contributes to prior studies evaluating the appropriateness of the Belief Adjustment Model predictions about the effect of textual presentation order on decision-making, by providing evidence from an emerging market.Practical implicationsResults attempt to increase the awareness of investors and encourage them to use multiple sources of information to avoid the probable bias that can result from management's manipulation of narratives. In addition, the study could be of interest to regulators and standard-setters, where the results reveal the need for guidelines and regulations to guide the disclosure of narrative information and the use of graphical information in corporate reports.Originality/valueTo the best of the authors' knowledge, this is the first study to examine the effect of two impression management strategies in narrative disclosures (readability and information order), along with the use of graphical representations, on non-professional investors' judgment in an emerging market, like Egypt.

show abstract

Section: Experiments 2 (Results Of Testing H2a and H2b)supporting

confidence: 89%

Section: Participantsmentioning

confidence: 99%

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

El-Sayed

Adel

Elmougy

et al. 2020

JAAR

View full text Add to dashboard Cite

show abstract

“…Pinsker (2011) presents evidence that given a long series of disclosure, nonprofessional investors observe the recency effect. Further, Theis et al (2012) provide evidence for the recency effect in the context of information ordering in management commentary. Furthermore, Hellmann et al (2017) also show that with strategic positioning of narrative information, non-professional investors are more susceptible to the recency effect.…”

Section: The Belief Adjustment Modelmentioning

confidence: 85%

ShariahSupervisory Board Report (SSBR) in Islamic banks

Rafay

Farid

2018

IMEFM

View full text Add to dashboard Cite

Purpose The primary purpose of this study is to determine the impact of information ordering in Shariah Supervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms of Shariah compliance and other conventional parameters. Design/methodology/approach The study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies. Findings Evidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant. Practical implications The SSBR provides the management with an excellent opportunity to communicate and convince the investors about Shariah compliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception. Originality/value For the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

show abstract

“…Tujuan penelitian ini adalah untuk menguji efek moderasi pembingkaian informasi dan gaya kognitif terhadap efek resensi pada proses pengambilan keputusan akuntansi manajemen. Beberapa penelitian empiris terdahulu secara konsisten mendokumentasikan bukti yang mendukung bias keputusan model belief-adjustment (Hogarth dan Einhorn, 1992) di bidang pengauditan (Asare dan Messier, 1991;Pei et al, 1992;Bamber et al, 1997;Krishnamoorthy et al, 1999;dan Nasution dan Supriyadi, 2007), investasi saham (Alvia dan Sulistiawan, 2010;Pinsker, 2011;Gunawan dan Yusuf, 2012;dan Armet, 2013), pelaporan keuangan (Theis et al, 2012) dan akuntansi manajemen (Dillard et al, 1991dan Rutledge, 1995. Penelitian ini memberi bukti empiris peran pembingkaian informasi dalam memitigasi bias efek urutan bukti dalam bidang akuntansi manajemen serta memberikan kajian yang dapat mengarahkan manajer dalam pengambilan keputusan secara optimal.…”

Section: Pendahuluanunclassified

Peran Moderasi Framing Dan Gaya Kognitif Terhadap Bias Efek Urutan Bukti Dalam Keputusan Penganggaran

Ekasari

Supriyadi

2018

EKUITAS

View full text Add to dashboard Cite

This study is aimed to empirically test the moderating roles of information framing and cognitive style on recency effect in budgeting decision, as a part of management accounting decisions. Laboratory experimental method used in this study with a 2x2x2 between-subjects design involving participants of 100 undergraduate accounting students at two universities in Central of Java and Yogyakarta provinces. The results of this study indicate that in the Step-by-Step (sequentially) response mode, the occurence of recency effects can be mitigated by information framing. In contrast, participants in the End-of-Sequence (simultaneously) response mode did not experience any order effects. Moreover, the interesting finding is that the interaction effect between information order and response modes indicating that the End-of-Sequence response mode alone can reduce the recency effects. However, the prediction of interaction effect between information order, information framing, and cognitive styles in both Step-by-Step and End-of-Sequence was not supported.

show abstract

Information order effects in the context of management commentary—initial experimental evidence

Cited by 15 publications

References 23 publications

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market

ShariahSupervisory Board Report (SSBR) in Islamic banks

Peran Moderasi Framing Dan Gaya Kognitif Terhadap Bias Efek Urutan Bukti Dalam Keputusan Penganggaran

Contact Info

Product

Resources

About