Melbourne Accounting Research Seminar - Professor Hun Tong Tan

Professor Hun Tong Tan from Nanyang Technological University will present a MARS seminar.

Topic: How Repeated Exposure and Readability Affects Investors' Reactions to Managers' Strategic Title Emphasis?

Abstract: We conduct experiments to examine how repeated exposure and readability jointly affect investors’ reactions to managers’ strategic positive emphasis in the title of a disclosure when firm performance is mixed. We consider two scenarios where readability differs. In a less readable disclosure case, where investors cannot fully understand disclosure contents and tend to rely on simple cues such as the emphasis in a disclosure’s title, we find that a title with (versus without) a positive emphasis leads to more positive performance judgments, and this effect is more likely when investors receive the same message multiple times. In contrast, in a more readable disclosure case, where investors can understand disclosure contents and are able to see through managers’ strategic positive emphasis, we find that a title with (versus without) a positive emphasis leads to more negative performance judgments, but this effect is less likely when investors receive the same message multiple times. Our findings are consistently replicated regardless of whether investors receive repeated management disclosures in the original-full-length form (Experiment 1) or in a notification form with only a title and a hyperlink (Experiments 2 and 3). Additionally, we find that compared to checking repeated notifications one by one, checking repeated notifications all at once reduces investors’ reliance on positive title emphases when they receive less readable disclosures in Experiment 2, but it does not prevent investors from processing information less attentively when they receive more readable disclosures in Experiment 3. Overall, our results suggest that repeated exposure makes investors more vulnerable to strategic emphases in management disclosure titles.