The Impact of Expertise and Investment Familiarity on Investors' Use of Online Financial Report Information

Abstract

In this study we use a unique dataset to examine whether professional and nonprofessional investors use different online quarterly financial information when making investment decisions, and whether the online information they use depends on whether they are researching a new investment or evaluating a current investment. Our results suggest that professional investors prefer to view PDF-formatted quarterly reports and tend to rely directly on the financial statements compared with nonprofessional investors who prefer to view HTML-formatted reports and have a tendency to rely more on management's discussion of the quarter's results. Our results also suggest that, for nonprofessional investors, investment familiarity (i.e., whether they are evaluating a current investment or researching a new investment) strongly affects the type of financial information they view within a firm's quarterly reports. Our results have implications for the design of experimental studies, and provide information useful to managers, financial report users, standard setters, and researchers as they attempt to better understand the types of information that professional and nonprofessional investors use when making investment decisions.

Exploring the use of online corporate sustainability information

“…Whilst the Web server log research method gives comparatively greater breadth in investigating online information seeking behaviour, it does not indicate how information is used and whether it is useful. It assumes that where information has been actively requested, demanded and successfully delivered, it is at least partially read and provides a proxy for online use (Hodge & Pronk, 2006). 11 Furthermore, the proxy for online users, the IP address, identifies a network node rather than an individual, and does not detail why the Website is being accessed.…”

Users’ Perceptions on Internet Financial Reporting Practices in Emerging Markets: Evidence from Jordan

“…Regarding using the Web as a survey tool, the response rate was 13.2% which the authors identified as being lower than other similar projects (Debrecency et al, 2001). Hodge and Pronk (2006) examined whether professional and non-professional investors use varying online financial information, and whether there was a direct association between the information they were using and the investors' familiarity with the investment. The findings showed that professional users prefer to rely on the published financial statements in pdf format whereas non-professional users prefer the managers' take on the results in html format.…”

“…The other two sections contain twenty-two statements related to the respondent's perceptions regarding the level of usefulness and usability of IFR for users' decision making. The sections were informed by Debrency et al (2001), Khadaroo (2005), Hodge and Pronk (2006), and Ghani et al (2009 a, b). The review of these studies led to the identification of the individual statements listed in the two sections.…”

Comprehensive income information: a user's perspective

“…In Canada, 49% of adults directly or indirectly own shares (Litan, 2003). Since nonprofessional investors appear to use financial statements in their investment decisions (Hodge and Pronk, 2006;Brazel et al, 2014), they are an important stakeholder group. Hence, it is worth investigating how financial information affects their judgements and decisions.…”

“…Nonprofessional investors are not expected to have clear, predefined information needs or to search for information in a focused manner as they make their investment decision (Hodge and Pronk, 2006). In fact, they appear to read financial statement information in the order in which it is presented (Bouwman, 1982;Maines and McDaniel, 2000), evaluating the data in a relatively unstructured manner in light of fuzzy valuation models and lack of clear understanding of various financial statement items and how they all tie together (SRI International, 1987;Maines and McDaniel, 2000).…”