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Shorter and easier is more useful: a longitudinal analysis of how financial report enforcement affects individual investors

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Pascual Ezama, David and Rodríguez Paredes, Mercedes and Sánchez Martín, María del Pilar and Gil-Gómez de Liaño, Beatriz (2018) Shorter and easier is more useful: a longitudinal analysis of how financial report enforcement affects individual investors. Journal of Behavioral and Experimental Economics, 74 . pp. 29-37. ISSN 2214-8043

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Official URL: https://doi.org/10.1016/j.socec.2018.03.002



Abstract

According to the literature, individual investors rarely use accounting and financial information (AFI), even though they do not give it a particularly low valuation when asked. This behavior increases the risk to lose investments. The main contribution of this paper is to propose a new AFI format: a one-page report that is short and easy to understand, as a complement to the long and complex traditional format in order to increase the usefulness of information for investors and to decrease investment risk. Two experiments provide evidence about the increased usefulness of AFI when using the new proposed format. More importantly, it seems that results in terms of profits also improve considerably in medium (one year) and long-term (four years) investments, in contrast to more modest profits of speculative investments. Furthermore, this difference occurs regardless of the investors’ previous experience.


Item Type:Article
Uncontrolled Keywords:Accounting information; Enforcement statements; Investment risk; Behavioral accounting
Subjects:Social sciences > Economics > Finance
Social sciences > Economics > Stock exchanges
ID Code:60214
Deposited On:28 Apr 2020 08:36
Last Modified:28 Apr 2020 08:41

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