Numerical Formats within Risk Disclosures and the Moderating Effect of Investors' Concerns about Management Discretion

2014 ◽  
Vol 90 (3) ◽  
pp. 1149-1168 ◽  
Author(s):  
Mark W. Nelson ◽  
Kathy K. Rupar
Keyword(s):  
Moderating Effect ◽  
Cognitive Capacity ◽  
Persuasion Knowledge ◽  
Knowledge Model ◽  
Accounting Disclosures ◽  
Financial Disclosures ◽  
Risk Judgments ◽  
Risk Disclosures

ABSTRACT We report the results of two experiments that provide evidence that investors' risk judgments are affected by the numerical format used to describe outcomes within accounting disclosures. Consistent with prior research in psychology, investors assess higher risk in response to dollar-formatted disclosures than to equivalent percentage-formatted disclosures. Consistent with the Persuasion Knowledge Model (Friestad and Wright 1994), this effect is moderated when investors have both (1) awareness that management has discretion over format, and (2) sufficient cognitive capacity to consider its implications. Our results provide insight about the effects of current disclosure formats and suggest implications for managers who choose formats, investors who interpret formatted information, and regulators who consider whether to further prescribe the formats that are used in financial disclosures.

scholarly journals Juxtaposing the persuasion knowledge model and privacy paradox: An experimental look at advertising personalization, public policy and public understanding

2016 ◽  
Vol 10 (1) ◽  
Author(s):  
Nancy Howell Brinson ◽  
Matthew S. Eastin
Keyword(s):  
Big Data ◽  
Perceived Risk ◽  
Personal Information ◽  
Public Understanding ◽  
Message Delivery ◽  
Persuasion Knowledge ◽  
Knowledge Model ◽  
Privacy Paradox ◽  
Complex Relationships ◽  
Personalized Advertising

Recent studies suggest the expanding collection and use of big data by advertisers to target messages to consumers based on their location, demographics and online behaviors is escalating information privacy concerns and negatively impacting campaign outcomes. For communication scholars and practitioners, this recent attitudinal shift indicates a critical need to better understand consumer perceptions related to personalized advertising in the era of big data. It is currently assumed that U.S. self-regulatory initiatives, including the AdChoices Icon, reduce perceived risk by giving consumers a greater sense of control over the exchange of their personal information online (Castro, 2011). However, less than 37% of U.S. Internet users are familiar with the AdChoices Icon (eMarketer, 2015), and 52% incorrectly believe that privacy policies ensure the confidentiality of their personal information (Pew, 2014). To examine the complexities of the privacy paradox, the present study utilizes a 2x2x2 experiment (N = 382) to measure attitudes toward personalized advertising with and without the presence of the AdChoices Icon. A Univariate GLM analysis of the data indicate that when controlling for demographics, online trust, message credibility, and perceived risks and benefits, advertising personalization did not have a significant effect on attitude toward the ad, but inclusion of the AdChoices Icon did. Further, respondents indicating no knowledge of the AdChoices Icon reported lower attitudinal responses toward the ad compared to those who were knowledgeable of its meaning. Exploring these complex relationships offers to advance research and practice by extending Persuasion Knowledge Model to examine the effects of personalized online message delivery, as well as offering practitioners actionable insights to improve their personalized advertising outcomes.

scholarly journals News in an Era of Content Confusion: Effects of News Use Motivations and Context on Native Advertising and Digital News Perceptions

2019 ◽  
Vol 97 (1) ◽  
pp. 161-187 ◽  
Author(s):  
Michelle A. Amazeen
Keyword(s):  
Contextual Effects ◽  
Persuasion Knowledge ◽  
Online Experiment ◽  
Knowledge Model ◽  
Soft News ◽  
Digital News ◽  
News Use

This study examined the effects of news use motivations and differing native advertising contexts (hard vs. soft news) on the ability to perceive commercialized content, evaluations of native advertising, and ensuing digital news perceptions. Based upon the framework of the persuasion knowledge model, an online experiment was conducted among a sample of U.S. adults ( N = 684). Engaging with news for informational motivations conditioned perceptions of advertising as did the contextual effects of hard versus soft news. Furthermore, hard-news approaches to native advertising were perceived more unfavorably by audiences and tarnished the subsequent reporting of actual journalists.

Risk disclosures and firm value: the role of governance in an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Surbhi Jain ◽  
Mehul Raithatha
Keyword(s):  
Firm Value ◽  
Good Governance ◽  
Negative Impact ◽  
Emerging Market ◽  
Moderating Effect ◽  
Least Square ◽  
Governance Mechanism ◽  
Content Type ◽  
Risk Disclosures ◽  
The Impact

PurposeThe objective of this paper is to investigate the impact of risk disclosures on firm value. We further investigate whether effective governance moderates the relation between risk disclosures and firm value.Design/methodology/approachWe use a sample of the top 200 Indian listed firms on NSE from 2013 to 2018. The generalised method of moments (GMM) along with the ordinary least square (OLS) is used to investigate our research problem. Further, we use the Propensity Score Matching (PSM) technique and the Heckman selection model for correcting selection bias in the robustness section.FindingsWe find that higher risk disclosures result in lower firm value. Besides, we show that better governance minimizes the negative impact of risk disclosures on firm value. This finding encourages firms to have a good governance mechanism to mitigate the adverse effects of risk disclosures in public.Originality/valueThe main contribution of our paper is to examine the moderating effect of governance between risk disclosures in the annual report and firm value (market-based and accounting-based) in the context of an emerging economy. Moreover, the paper highlights the potential moderating effect of independent directors and resourceful boards on the risk disclosures and firm value in the Indian context.

How Do Investors Judge the Risk of Financial Items?

2005 ◽  
Vol 80 (1) ◽  
pp. 221-241 ◽  
Author(s):  
Lisa Koonce ◽  
Mary Lea McAnally ◽  
Molly Mercer
Keyword(s):  
Risk Model ◽  
Unintended Consequence ◽  
Financial Risks ◽  
Psychology Research ◽  
Risk Disclosure ◽  
Behavioral Variables ◽  
Academic Researchers ◽  
Risk Judgments ◽  
Risk Disclosures ◽  
Current Risk

This paper proposes and tests a risk model that explains how investors perceive financial risks. The model combines conventional decision-theory variables—probabilities and outcomes—with behavioral variables from psychology research by Slovic (1987), such as the extent to which a risky item is new, causes worry, and is controllable. To test our model, we conduct two studies in which M.B.A. students judge the risk of a broad range of financial items. Our results indicate that both the decisiontheory variables and Slovic's (1987) behavioral variables are important in explaining investors' risk judgments. Further, we demonstrate that information about the amount of potential loss outcome contained within mandated risk disclosures not only directly influences risk judgments, but also indirectly affects such judgments via its effect on some of Slovic's (1987) behavioral variables. By identifying this unintended consequence of current risk disclosures, these results have the potential to influence the way accounting regulators, firm managers, and academic researchers think about risk disclosure.

Epistemological and methodical challenges in the research on embedded advertising formats: A constructivist interjection

2020 ◽  
Vol 45 (3) ◽  
pp. 325-349
Author(s):  
Nils S. Borchers ◽  
Jens Woelke
Keyword(s):  
Explanatory Power ◽  
Advertising Research ◽  
Constructivist Approach ◽  
Persuasion Knowledge ◽  
Knowledge Model ◽  
Research Designs ◽  
Advertising Literacy

AbstractAdvertisers’ increasing use of embedded advertising formats makes it more difficult for consumers to identify persuasive intents in advertiser messages. However, only if consumers identify these intents and categorize messages as advertising, can they activate advertising-specific reception strategies which might result in lessened persuasion effects. The fact that consumers regularly miss persuasive intents in non-traditional advertising environments, we suggest in this article, carries epistemological and methodical implications. To better appreciate these implications, we argue for a more systematic adoption of a constructivist approach in advertising research. Some established concepts in advertising research such as the persuasion knowledge model and advertising literacy already implicitly follow a constructivist rationale. However, to more fully exploit the potential of a constructivist approach, we review communication concepts that inform advertising research, clarify why a constructivist approach increases the explanatory power of advertising research, and discuss challenges for research designs.

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