Graduation Year

2008

Document Type

Dissertation

Degree

Ph.D.

Degree Granting Department

Accounting

Major Professor

Uday Murthy, Ph.D.

Keywords

Auditing, Decision making, Reporting frequency, Source credibility, Investor perception

Abstract

This study was designed to examine the impact of different levels of reporting frequency (periodic versus continuous) of financial information, both with and without assurance, on individual investors in a stock price prediction task. Reporting was manipulated at two levels: periodic and continuous. Assurance was manipulated at two levels: no assurance and with assurance. In addition, a base level condition was included. The experiment was designed to collect data regarding both the investors' performance and their perceptions. Period one of the experiment consisted of the base level condition for all participants. Independent variable manipulation was implemented in period two, using a 2 X 2 design. The results indicated that the main effect of Assurance was significant with regard to the number of times participants correctly predicted the change in stock price direction (PREDICTION). The results of the analysis also indicated that the interaction of Reporting and Assurance was significant with regard to the number of times participants made stock price change predictions in accordance with an expectation of mean-reverting stock prices (TRACKING). Post hoc analysis on TRACKING indicated that increased levels of reporting frequency and assurance could adversely affect the quality of individual investors' investment decisions. The results indicated that increased levels of reporting and assurance were not significant with regard to individual investors' perception of source credibility, information relevance or information value. Post hoc analysis provided some evidence that increased levels of reporting frequency may lead to an increase in the perceived trustworthiness of the source of the information and investors may be willing to pay more for the stock of a company that provided increased levels of reporting of fundamental financial data.

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