Information choice within disclosures, mobile devices, and investor estimates of fundamental value
Year: 2016
Type: article
Abstract: I examine how information choice within financial disclosures interacts with the screen size used to view the disclosure (traditional computer or small mobile device size) to influence investors' estimates of fundamental value. One proposed solution to concerns of investors’ increasing information processing costs is providing information choice within financial disclosures, meaning investors have the flexibility to choose the sections and order of information to read within the disclosure. However, theory suggests processing costs could increase, rather than decrease, if the disclosure is viewed on a smaller screen mobile device, which is an emerging technology used by investors. Consistent with predictions, results of an experiment show that high information choice positively affects investors’ effort and information integration when estimating fundamental value if the disclosure is viewed on a traditional screen. Conversely, high information choice negatively affects investors’ effort and information integration if viewed on a small screen. These findings suggest screen size could be an important moderator of some disclosure presentation effects, which is increasingly important as more investors use mobile devices to access, read, and trade on financial information. My findings also caution firms and regulators about expanding the use of disclosures providing information choice without considering the screen size used to access the disclosure.
Author: Stephanie M. Grant
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2582464750