Internet financial reporting: The effects of information presentation format and content differences on investor decision making

  • Authors:

  • Andrea Seaton Kelton;Robin R. Pennington

  • Affiliations:

  • Schools of Business, Wake Forest University, PO Box 7285, Winston-Salem, NC 27109, USA;Department of Accounting, Poole College of Management, North Carolina State University, Campus Box 8113, Raleigh, NC 27695, USA

  • Venue:
  • Computers in Human Behavior
  • Year:
  • 2012

Quantified Score

Hi-index 0.00

Visualization

Abstract

Internet financial reporting provides investors with several options regarding which type of financial disclosures to view and the format in which to view these. However, research suggests that these options may result in unintended cognitive effects leading to less optimal decision making. Accordingly, this study examines the individual and joint impact of presentation format and information content on nonprofessional investors' decision making within the Internet financial reporting environment. Alternative presentation formats which vary in their navigational flexibility are studied to isolate the effects attributable to each format. Specifically, hyperlinked financial information is compared to paper-based financial information. The effects of information content differences are also examined by investigating whether an unaudited letter from a company's management differentially affects hyperlink and paper users' investment judgments. We conduct an experiment in which graduate business students, proxies for nonprofessional investors, make financial investment-related judgments and decisions. Our results show that hyperlink users used less effort on the investment task than users of paper-based information. Furthermore, the management letter influenced the paper-based users' forward-looking judgments more so than the hyperlink users. The findings have implications for academic research, financial disclosure regulation and information systems design.