TY - JOUR
T1 - Joint effects of boilerplate and text markup on the judgments of novice and experienced users of financial information
AU - Henry, Elaine
AU - Peytcheva, Marietta
N1 - Publisher Copyright:
© 2020, American Accounting Association. All rights reserved.
PY - 2020
Y1 - 2020
N2 - We experimentally examine the effects of boilerplate disclosure and text markup on the judgments of novice and experienced users of financial information. We manipulate the presence of boilerplate (higher versus lower) and text markup (markup versus no markup) in sequential corporate disclosures, and examine participants’ sensitivity to diagnostic information about the firm’s financial performance. Using theory on the dilution effect, we predict that boilerplate will have a greater impact in the absence of markup, and markup’s positive effect on sensitivity to diagnostic information will be stronger in disclosures with higher boilerplate. Our findings are consistent with this prediction. We also find that experienced users have greater sensitivity overall to diagnostic information and that markup increases novices’ (but not experienced users’) sensitivity to diagnostic information. Our findings extend theory on potential remedies to the dilution effect and are potentially useful to regulators as they consider improving the usefulness of corporate disclosure.
AB - We experimentally examine the effects of boilerplate disclosure and text markup on the judgments of novice and experienced users of financial information. We manipulate the presence of boilerplate (higher versus lower) and text markup (markup versus no markup) in sequential corporate disclosures, and examine participants’ sensitivity to diagnostic information about the firm’s financial performance. Using theory on the dilution effect, we predict that boilerplate will have a greater impact in the absence of markup, and markup’s positive effect on sensitivity to diagnostic information will be stronger in disclosures with higher boilerplate. Our findings are consistent with this prediction. We also find that experienced users have greater sensitivity overall to diagnostic information and that markup increases novices’ (but not experienced users’) sensitivity to diagnostic information. Our findings extend theory on potential remedies to the dilution effect and are potentially useful to regulators as they consider improving the usefulness of corporate disclosure.
KW - Analysts
KW - Boilerplate disclosure
KW - Decision aid
KW - Dilution effect
KW - Investor judgment
KW - Nonprofessional investors
UR - http://www.scopus.com/inward/record.url?scp=85083696879&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85083696879&partnerID=8YFLogxK
U2 - 10.2308/bria-52582
DO - 10.2308/bria-52582
M3 - Article
AN - SCOPUS:85083696879
SN - 1050-4753
VL - 32
SP - 1
EP - 20
JO - Behavioral Research in Accounting
JF - Behavioral Research in Accounting
IS - 1
ER -