Doctor of Philosophy (Ph.D.)
Degree Granting Department
Patrick Wheeler, Ph.D.
Lisa Gaynor, Ph.D.
Uday Murthy, Ph.D.
Terry Sincich, Ph.D.
accounting, investor, proximity
This study examines the efficacy of presenting footnotes information in alternative display formats on investors’ judgments and decisions. Non-professional investors play a significant role in the capital markets yet they do not always attend to information contained in footnote disclosures. As a result, nonprofessional investors systematically misprice firms and misallocate resources. Recognizing that increased mandatory and voluntary disclosures create additional challenges for non-professional investors, both the FASB and SEC have actively sought ways to increase the effectiveness of disclosures. I hypothesize that high display proximity, low signal-to-noise presentation formats can increase investors’ attention to and processing of footnote disclosures and hence performance on an investing task. Further I hypothesize that low display proximity, low signal-to-noise presentation formats can improve investor performance on a recognition task. Lastly, I hypothesize that non-professional investors viewing high display proximity, low signal-to-noise footnote disclosures will rate usability higher than nonprofessional investors viewing footnote disclosures in the other three display formats.
Amazon Mechanical Turk workers are used as participants in a 2 x 2 between-participants experiment using two task types: an integrative (investing) task and a non-integrative (recognition) task. I manipulate display proximity (inline or side-by-side) and signal-to-noise ratio (footnotes presented simultaneously or individually). Contrary to my hypotheses, I find that low signal-to-noise ratio increases non-professional investors’ performance on both the integrative (investing) and non-integrative (recognition) tasks. Further, although task performance increased under the low signal-to-noise presentation format, participants did not evaluate either signal-to-noise presentation format easier to use or more useful. Instead, participants found the high display proximity (side-by-side) presentation format easier to use, although it did not yield performance increases.
Scholar Commons Citation
Agnew, Kevin, "The Effect of Presentation Format on Investor Judgments and Decisions: Does the Effect Differ for Varying Task Demands?" (2016). Graduate Theses and Dissertations.
Available for download on Saturday, August 05, 2017