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.
| Identifer | oai:union.ndltd.org:USF/oai:scholarcommons.usf.edu:etd-7358 |
| Date | 08 July 2016 |
| Creators | Agnew, Kevin |
| Publisher | Scholar Commons |
| Source Sets | University of South Flordia |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | Graduate Theses and Dissertations |
| Rights | default |
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