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The Impact of Text Information Readability of Listed Companies' Annual Reports on Investors' Perception and Decision-making Behavior

Authors:
Jinping Gao
Qin Xiao
Yan Wan
Li Gao

Keywords: annual report; readability; trust perception; emotional experience; investment intention

Abstract:
Readability is one of the most important characteristics of text information in the listed company's annual report. There exists a "framing effect" when decision makers use information, which means individual decisions are influenced not only by the content, but also by the way in which information is expressed. Readability greatly affects investors' trust perception and emotional experience, then, affects their decision-making. Based on the heuristic model of emotion and dual processing theory, this paper established a theoretical model to analyze the impact of readability on investors' trust perception, emotional experience and investment intention under different financial conditions. By using behavioral methods, we designed a 2 (readability: high, low) *2 (financial status: good, spread) mixed cross experiment to collect data. Our study reveals that regardless of profit status, investors are more willing to invest in companies with more readable annual reports and that the influencing process is mediated by investors' emotional experience and trust perception. These findings provided evidence for how the information disclosed by enterprises affects investors' perception and decision-making behaviors and also established theoretical basis for improving corporate information disclosure strategies.

Pages: 39 to 44

Copyright: Copyright (c) IARIA, 2019

Publication date: November 24, 2019

Published in: conference

ISSN: 2326-9294

ISBN: 978-1-61208-757-3

Location: Valencia, Spain

Dates: from November 24, 2019 to November 28, 2019