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Individual investors and financial disclosure

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  • Lawrence, Alastair

Abstract

Using detailed data of individual investors, this study shows that, on average, individuals invest more in firms with clear and concise financial disclosures. The results indicate this relation is less pronounced for high frequency trading and financially-literate individuals. The study also shows that individuals' returns are increasing with clearer and more concise disclosures, implying such disclosures reduce individuals' relative information disadvantage. Together, the findings suggest improved corporate disclosure practices benefit individual investors, in particular buy-and-hold investors.

Suggested Citation

  • Lawrence, Alastair, 2013. "Individual investors and financial disclosure," Journal of Accounting and Economics, Elsevier, vol. 56(1), pages 130-147.
  • Handle: RePEc:eee:jaecon:v:56:y:2013:i:1:p:130-147
    DOI: 10.1016/j.jacceco.2013.05.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lo, Kin & Ramos, Felipe & Rogo, Rafael, 2017. "Earnings management and annual report readability," Journal of Accounting and Economics, Elsevier, vol. 63(1), pages 1-25.
    2. repec:eee:jaecon:v:63:y:2017:i:2:p:329-357 is not listed on IDEAS
    3. Dyer, Travis & Lang, Mark & Stice-Lawrence, Lorien, 2016. "Do managers really guide through the fog? On the challenges in assessing the causes of voluntary disclosure," Journal of Accounting and Economics, Elsevier, vol. 62(2), pages 270-276.
    4. Ronald J. Balvers & John F. Gaski & Bill McDonald, 2016. "Financial Disclosure and Customer Satisfaction: Do Companies Talking the Talk Actually Walk the Walk?," Journal of Business Ethics, Springer, vol. 139(1), pages 29-45, November.
    5. repec:eee:jaecon:v:65:y:2018:i:2:p:380-398 is not listed on IDEAS
    6. repec:eee:jaecon:v:64:y:2017:i:2:p:221-245 is not listed on IDEAS
    7. Guay, Wayne & Samuels, Delphine & Taylor, Daniel, 2016. "Guiding through the Fog: Financial statement complexity and voluntary disclosure," Journal of Accounting and Economics, Elsevier, vol. 62(2), pages 234-269.
    8. Samuel B. Bonsall & Brian P. Miller, 0. "The impact of narrative disclosure readabilityon bond ratings and the cost of debt," Review of Accounting Studies, Springer, vol. 0, pages 1-36.
    9. Ajina, Aymen & Laouiti, Mhamed & Msolli, Badreddine, 2016. "Guiding through the Fog: Does annual report readability reveal earnings management?," Research in International Business and Finance, Elsevier, vol. 38(C), pages 509-516.
    10. Michael, Bryane & Goo, Say-Hak, 2016. "The Value of the Corporate Governance Canon on Chinese Companies," EconStor Preprints 173675, ZBW - German National Library of Economics.
    11. repec:eee:jfinec:v:124:y:2017:i:2:p:373-394 is not listed on IDEAS
    12. Bin Miao & Siew Hong Teoh & Zinan Zhu, 2016. "Limited attention, statement of cash flow disclosure, and the valuation of accruals," Review of Accounting Studies, Springer, vol. 21(2), pages 473-515, June.
    13. repec:spr:reaccs:v:22:y:2017:i:2:d:10.1007_s11142-017-9388-0 is not listed on IDEAS
    14. André Schmidt, 2017. "Determinants of Corporate Voting – Evidence from a Large Survey of German Retail Investors," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 18(1), pages 71-103, February.

    More about this item

    Keywords

    Individual investors; Financial disclosure; Individual characteristics; Information disadvantage;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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