The impact of analyst report complexity on trading decisions in an experimental setting

Wojahn, Oliver W.; Geister, Susanne; Richter, Júlia

doi:10.1016/j.jbef.2015.05.002

Cited by 5 publications

(5 citation statements)

References 11 publications

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“…In addition, because this paper focuses on the impact of linguistic characteristics, students in the English section were chosen to participate in the experiment. Finally, due to the difficulty of having real investors participating in the study, those students act as proxy or surrogates to real investors [16].…”

Section: Methods Participantsmentioning

confidence: 99%

“…Extending this line of research beyond the firm accounting disclosures, [14][15][16] are examples of the studies that focused their efforts on studying how would the readability of analysts' reports impact investors' decisions. Twedt and Rees provided evidence that analysts' reports have an impact on the market and their information content is significant, and their complexity level can explain crosssectional variation in the market's response to the recommendations included in the reports [14].…”

Section: Task Complexity and Decision Makingmentioning

confidence: 99%

“…Through a laboratory experiment on undergraduate students in the first, second and third year in Germany, Wojahn et al investigated the impact of analyst reports complexity on the trading decision of investors [16]. However, they didn't find a significant relationship between them; analyst report complexity wasn't an indicator of analyst's competence or the ambiguity of the report of the firm.…”

Section: Task Complexity and Decision Makingmentioning

confidence: 99%

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Effect of Readability and Complexity on Naive Investors Decisions: An Experimental Study in an Emerging Economy

Badawy¹,

Ibrahim²

2019

Int J Account Res

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Purpose of this paper: The purpose of this paper is to investigate the impact of the readability and complexity levels of financial disclosures on naïve investors' willingness to invest and their stock valuation judgements. Design/methodology/approach: Two experiments were conducted during the study. The first experiment is a between subject experimental design and is conducted to investigate the impact of different readability levels (less readable Vs more readable) on naïve investors' investment judgements. The second experiment is a within subject experimental design and is conducted to test the impact of different complexity levels (more complex Vs less complex) on naïve investors' judgements. Non-parametric statistical tests were used to test the research hypotheses. Findings: The impact of readability level on investors' comfort and willingness to invest was clear and significant in the case of more complex negative information (options case) as investors' willingness to invest was lower in case of more readable negative information on options, but that was not the result in case of the less complex negative information (convertible bonds case). Readability levels affected investors' stock valuation whether the information presented is less complex or more complex. Investors' stock valuation was lower in case of less readable information than that in the case of more readable information. As for the impact of complexity, the results didn't show significant impact of the complexity levels on the investors' willingness to invest and their stock valuation. Research limitations/implications: This paper uses undergraduate students registered in the English section in the faculty of commerce of Alexandria University as a proxy for naive investors. Those students passed three courses of accounting and have basic knowledge in financial disclosures. Real investors were difficult to recruit as subjects for the experiment conducted. Social and Practical implications: The results of the study imply that different readability levels can have a significant impact on investors' willingness to invest in case the information presented is more complex and their stock valuation, whether the information presented is less complex or more complex. What is original/value of paper? This paper is the first to examine the impact of readability and complexity separately. The paper contributes to the existing literature examining the readability and complexity of financial disclosures on investors' decisions and judgements.

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Section: Methods Participantsmentioning

confidence: 99%

Section: Task Complexity and Decision Makingmentioning

confidence: 99%

Section: Task Complexity and Decision Makingmentioning

confidence: 99%

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Effect of Readability and Complexity on Naive Investors Decisions: An Experimental Study in an Emerging Economy

Badawy¹,

Ibrahim²

2019

Int J Account Res

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“…To test the research hypotheses and investigate the impact of assurance quality and level on non-professional investors' decisions, a 2 (Big4 vs non-Big4) X 2 (Reasonable vs. Limited) between-subjects experiment was designed. The researcher chose the experimental laboratory, as although it doesn't capture everything in the real world, but it allows the manipulation of the independent varia-bles (assurance quality and level) while holding other variables constant and this results in higher internal validity (Wojahn et al, 2015).…”

Section: Experimental Task and Designmentioning

confidence: 99%

أثر جودة ومستوى التوکید على برنامج إدارة مخاطر الأمن السیبرانی على قرارات المستثمرین المصریین غیر المحترفین: دراسة تجریبیة (باللغة الانجلیزیة)

بدوي¹

2021

مجلة الاسکندریة للبحوث المحاسبیة

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The objective of this study is to examine and analyze the impact of assurance quality (measured by the size of the audit firm performing this assurance; Big4 auditor vs. non-Big4) and assurance level (reasonable vs. limited assurance) on cybersecurity risk management program on non-professional investors' willingness to invest and their stock valuation. To fulfil the research objective, a 2X2 between-subjects experiment was designed to test the research hypotheses.Based on a sample of 64 MBA and postgraduate students in the Faculty of Commerce, Alexandria University and ESLSCA University, the researcher found evidence that high assurance quality (Big4 auditor) and reasonable assurance level conveyed in the assurance report on cybersecurity risk management program have a significant and positive effect on investors' willingness to invest and their stock valuation. However, the researcher didn't find significant difference in investors' willingness to invest or their stock valuation in case a limited assurance report is offered by a Big4 audit firm in comparison with the case of a reasonable assurance report offered by a non-Big4 audit firm. This study adds an experimental evidence to the literature on non-audit services and cybersecurity and will help in reducing the accounting research gap related to cybersecurity risk management program, which is consistent with the Egyptian government's efforts and attention paid to cybersecurity and its related risks.

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“…In addition, individuals carrying out such work tend to have their tasks restricted to either a specific company or limited number of companies within a given economic sector. The existence of such complex and non homogenous processes, carried out in silos by distinct individuals, leads to the generation of written reports that are extremely varied in terms of structure, content and form 3,4 . As a result, a systematic and standardised approach to source structured data from these reports is a near impossible task, even at research analyst, company provider or type of business level.…”

Section: Introductionmentioning

confidence: 99%

Assembling real networks from synthetic and unstructured subsets: the corporate reporting case

Viegas

Goto

Takayasu

et al. 2019

Sci Rep

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The analysis of interfirm business transaction networks provides invaluable insight into the trading dynamics and economic structure of countries. However, there is a general scarcity of data available recording real, accurate and extensive information for these types of networks. As a result, and in common with other types of network studies - such as protein interactions for instance - research tends to rely on partial and incomplete datasets, i.e. subsets, with less certain conclusions. Here, we make use of unstructured financial and corporate reporting data in Japan as the base source to construct a financial reporting network, which is then compared and contrasted to the wider real business transaction network. The comparative analysis between these two rich datasets - the proxy, partially derived network and the real, complete network at macro as well as local structural levels - provides an enhanced understanding of the non trivial relationships between partial sampled subsets and fully formed networks. Furthermore, we present an elemental agent based pruning algorithm that reconciles and preserves key structural differences between these two networks, which may serve as an embryonic generic framework of potentially wider use to network research, enabling enhanced extrapolation of conclusions from partial data or subsets.

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The impact of analyst report complexity on trading decisions in an experimental setting

Cited by 5 publications

References 11 publications

Effect of Readability and Complexity on Naive Investors Decisions: An Experimental Study in an Emerging Economy

Effect of Readability and Complexity on Naive Investors Decisions: An Experimental Study in an Emerging Economy

أثر جودة ومستوى التوکید على برنامج إدارة مخاطر الأمن السیبرانی على قرارات المستثمرین المصریین غیر المحترفین: دراسة تجریبیة (باللغة الانجلیزیة)

Assembling real networks from synthetic and unstructured subsets: the corporate reporting case

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