TY - JOUR
T1 - Trader Participation in Disclosure
T2 - Implications of Interactions with Management
AU - Elliott, W. Brooke
AU - Grant, Stephanie M.
AU - Hobson, Jessen L.
N1 - Publisher Copyright:
© CAAA
PY - 2020/3/1
Y1 - 2020/3/1
N2 - Technological advances are creating a shift in the information disclosure environment allowing more investors to interact with management. We examine three key levels of trader-management interaction to assess the accuracy of traders' market-tested value estimates and resulting market price. These data require an engaging experiment and a complex, contextually rich asset, which we create by playing a popular gaming app before the experiment. Participants view financial information, ask management questions, estimate value, and trade. We find that receiving non-personalized question responses improves trader estimates of value and market price efficiency relative to when traders ask questions but do not expect a response. This occurs because traders exert more effort estimating value and trading. However, receiving personalized versus non-personalized responses harms value estimates and market efficiency. This occurs because traders receiving personalized responses fixate on the interaction with management, dividing their attention and diverting it away from valuing and trading the asset.
AB - Technological advances are creating a shift in the information disclosure environment allowing more investors to interact with management. We examine three key levels of trader-management interaction to assess the accuracy of traders' market-tested value estimates and resulting market price. These data require an engaging experiment and a complex, contextually rich asset, which we create by playing a popular gaming app before the experiment. Participants view financial information, ask management questions, estimate value, and trade. We find that receiving non-personalized question responses improves trader estimates of value and market price efficiency relative to when traders ask questions but do not expect a response. This occurs because traders exert more effort estimating value and trading. However, receiving personalized versus non-personalized responses harms value estimates and market efficiency. This occurs because traders receiving personalized responses fixate on the interaction with management, dividing their attention and diverting it away from valuing and trading the asset.
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U2 - 10.1111/1911-3846.12524
DO - 10.1111/1911-3846.12524
M3 - Article
AN - SCOPUS:85079411436
SN - 0823-9150
VL - 37
SP - 68
EP - 100
JO - Contemporary Accounting Research
JF - Contemporary Accounting Research
IS - 1
ER -