The effect of investor sophistication on the influence of nonfinancial performance indicators on investors' judgments

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dc.contributor.authorCoram, P.J.
dc.date.issued2010
dc.description.abstractThis paper presents an experiment that examines how enhanced disclosure of nonfinancial performance indicators affects the stock-price estimates of nonprofessional and professional investors. Participants were provided with a case study containing excerpts from a hypothetical company’s annual report. The experiment was a 2 (nonprofessional and professional) × 3 (positive nonfinancial performance indicators, negative nonfinancial performance indicators, and financial information only) between-subjects design. Consistent with conservatism, the nonprofessional investors underreacted in their stock-price estimates to the positive nonfinancial disclosures, compared with professional investors with task-specific knowledge. The results from this study suggest that the value of enhanced disclosure of this type may not flow equally to all users of financial reports, if conservatism, and lack of task-specific knowledge, adversely affect their decision-making.
dc.description.statementofresponsibilityPaul J. Coram
dc.identifier.citationAccounting and Finance, 2010; 50(2):263-280
dc.identifier.doi10.1111/j.1467-629X.2009.00328.x
dc.identifier.issn0810-5391
dc.identifier.issn1467-629X
dc.identifier.orcidCoram, P.J. [0000-0003-3942-1497]
dc.identifier.urihttp://hdl.handle.net/2440/87580
dc.language.isoen
dc.publisherWiley
dc.rights© The Author
dc.source.urihttps://doi.org/10.1111/j.1467-629x.2009.00328.x
dc.subjectNonprofessional investors
dc.subjectNonfinancial performance indicators
dc.subjectConservatism
dc.subjectTask-specific knowledge
dc.titleThe effect of investor sophistication on the influence of nonfinancial performance indicators on investors' judgments
dc.typeJournal article
pubs.publication-statusPublished

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