IDEAS home Printed from https://ideas.repec.org/a/eee/aosoci/v110y2023ics0361368223000417.html
   My bibliography  Save this article

The impact of repeated notifications and notification checking mode on investors' reactions to managers’ strategic positive title emphasis

Author

Listed:
  • Chen, Wei
  • Tan, Hun-Tong
  • Wang, Elaine Ying

Abstract

We conduct an experiment to examine how repeated earnings notifications and the mode in which investors check notifications affect their reactions to managers' strategic positive emphasis in earnings release titles (i.e., when firm performance is not as positive as the emphasis indicated in the title). We predict and find that a title with (versus without) a strategic positive emphasis can result in both a negative content incongruency effect and a positive title impression effect. Consistent with our expectations, we find that repetition not only dampens the negative content incongruency effect but also amplifies the positive title impression effect. As a result, compared to a title without a strategic positive emphasis, we find that a title with a strategic positive emphasis is more likely to result in a favorable investment judgment when investors receive repeated notifications in a one-by-one mode than when they receive a notification for the first time. These results are consistent with our predictions. We also explore the impact of title emphasis when investors receive repeated notifications in an all-at-once mode. Our results show that a strategic positive title emphasis does not influence investment judgment when investors check repeated notifications all at once, suggesting that a small behavioral change can protect investors from being swayed by managers’ strategic positive title emphasis.

Suggested Citation

  • Chen, Wei & Tan, Hun-Tong & Wang, Elaine Ying, 2023. "The impact of repeated notifications and notification checking mode on investors' reactions to managers’ strategic positive title emphasis," Accounting, Organizations and Society, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:aosoci:v:110:y:2023:i:c:s0361368223000417
    DOI: 10.1016/j.aos.2023.101470
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0361368223000417
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.aos.2023.101470?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chen, Wei & Tan, Hun-Tong, 2013. "Judgment effects of familiarity with an analyst’s name," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 214-227.
    2. Mario J. Maletta & Yue (May) Zhang, 2012. "Investor Reactions to Contrasts Between the Earnings Preannouncements of Peer Firms," Contemporary Accounting Research, John Wiley & Sons, vol. 29(2), pages 361-381, June.
    3. Barton, Jan & Mercer, Molly, 2005. "To blame or not to blame: Analysts' reactions to external explanations for poor financial performance," Journal of Accounting and Economics, Elsevier, vol. 39(3), pages 509-533, September.
    4. Hun‐Tong Tan & Elaine Ying Wang & Bo Zhou, 2014. "When the Use of Positive Language Backfires: The Joint Effect of Tone, Readability, and Investor Sophistication on Earnings Judgments," Journal of Accounting Research, Wiley Blackwell, vol. 52(1), pages 273-302, March.
    5. Brown, T. & Grant, Stephanie M. & Winn, Amanda M., 2020. "The effect of mobile device use and headline focus on investor judgments," Accounting, Organizations and Society, Elsevier, vol. 83(C).
    6. Tan, Hun-Tong & Wang, Elaine Ying & Yoo, G-Song, 2019. "Who likes jargon? The joint effect of jargon type and industry knowledge on investors’ judgments," Journal of Accounting and Economics, Elsevier, vol. 67(2), pages 416-437.
    7. W. Brooke Elliott & Jessen L. Hobson & Brian J. White, 2015. "Earnings Metrics, Information Processing, and Price Efficiency in Laboratory Markets," Journal of Accounting Research, Wiley Blackwell, vol. 53(3), pages 555-592, June.
    8. Lisa Koonce & Marlys Gascho Lipe, 2010. "Earnings Trend and Performance Relative to Benchmarks: How Consistency Influences Their Joint Use," Journal of Accounting Research, Wiley Blackwell, vol. 48(4), pages 859-884, September.
    9. Highhouse, Scott & Paese, Paul W. & Leatherberry, Tamara, 1996. "Contrast Effects on Strategic-Issue Framing," Organizational Behavior and Human Decision Processes, Elsevier, vol. 65(2), pages 95-105, February.
    10. Libby, R & Tan, HT, 1999. "Analysts' reactions to warnings of negative earnings surprises," Journal of Accounting Research, Wiley Blackwell, vol. 37(2), pages 415-435.
    11. Nerissa C. Brown & Brian T. Gale & Stephanie M. Grant, 2022. "How Do Disclosure Repetition and Interactivity Influence Investors’ Judgments?," Journal of Accounting Research, Wiley Blackwell, vol. 60(5), pages 1775-1811, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin, Rachel, 2019. "Examination and implications of experimental research on investor perceptions," Journal of Accounting Literature, Elsevier, vol. 43(C), pages 145-169.
    2. Cade, Nicole L., 2018. "Corporate social media: How two-way disclosure channels influence investors," Accounting, Organizations and Society, Elsevier, vol. 68, pages 63-79.
    3. Chen, Zhenhua & Loftus, Serena, 2019. "Multi-method evidence on investors’ reactions to managers’ self-inclusive language," Accounting, Organizations and Society, Elsevier, vol. 79(C).
    4. Han, Jun, 2013. "A literature synthesis of experimental studies on management earnings guidance," Journal of Accounting Literature, Elsevier, vol. 31(1), pages 49-70.
    5. Cox, Raymond A.K. & Dayanandan, Ajit & Donker, Han, 2016. "The Ricochet Effect of Bad News," The International Journal of Accounting, Elsevier, vol. 51(3), pages 385-401.
    6. Chen, Wei & Han, Jun & Tan, Hun-Tong, 2016. "Investor reactions to management earnings guidance attributions: The effects of news valence, attribution locus, and outcome controllability," Accounting, Organizations and Society, Elsevier, vol. 55(C), pages 83-95.
    7. Asay, H. Scott & Libby, Robert & Rennekamp, Kristina M., 2018. "Do features that associate managers with a message magnify investors’ reactions to narrative disclosures?," Accounting, Organizations and Society, Elsevier, vol. 68, pages 1-14.
    8. Grant, Stephanie M. & Hodge, Frank D. & Sinha, Roshan K., 2018. "How disclosure medium affects investor reactions to CEO bragging, modesty, and humblebragging," Accounting, Organizations and Society, Elsevier, vol. 68, pages 118-134.
    9. Eddy Cardinaels & Stephan Hollander & Brian J. White, 2019. "Automatic summarization of earnings releases: attributes and effects on investors’ judgments," Review of Accounting Studies, Springer, vol. 24(3), pages 860-890, September.
    10. Cardinaels, Eddy & Hollander, Stephan & White, Brian, 2019. "Automatic summarization of earnings releases : Attributes and effects on investors’ judgments," Other publications TiSEM 721f64f4-033e-453b-a3e7-2, Tilburg University, School of Economics and Management.
    11. Jingyu Gao & F.G.H. (Frank) Hartmann & Min Zhang & Yasheng Chen, 2023. "The impact of CSR performance and CSR disclosure readability on investors’ earnings estimates," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S1), pages 1157-1186, April.
    12. Kristina Rennekamp, 2012. "Processing Fluency and Investors’ Reactions to Disclosure Readability," Journal of Accounting Research, Wiley Blackwell, vol. 50(5), pages 1319-1354, December.
    13. Darius Fatemi & John Hasseldine & Peggy Hite, 2020. "The Influence of Ethical Codes of Conduct on Professionalism in Tax Practice," Journal of Business Ethics, Springer, vol. 164(1), pages 133-149, June.
    14. Umar, Tarik, 2022. "Complexity aversion when SeekingAlpha," Journal of Accounting and Economics, Elsevier, vol. 73(2).
    15. David Hirshleifer & Sonya S. Lim & Siew Hong Teoh, 2011. "Limited Investor Attention and Stock Market Misreactions to Accounting Information," The Review of Asset Pricing Studies, Society for Financial Studies, vol. 1(1), pages 35-73.
    16. AERTS, Walter & TARCA, Ann, 2008. "The effect of institutional setting on attributional content in management commentary reports," Working Papers 2008010, University of Antwerp, Faculty of Business and Economics.
    17. Béatrice BOULU-RESHEF & Catherine BRUNEAU & Maxime NICOLAS & Thomas RENAULT, 2022. "An Experimental Analysis of Investor Sentiment," LEO Working Papers / DR LEO 2940, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    18. Leung, Sidney & Parker, Lee & Courtis, John, 2015. "Impression management through minimal narrative disclosure in annual reports," The British Accounting Review, Elsevier, vol. 47(3), pages 275-289.
    19. Le Wang & Xiaoyan Chen & Xing Li & Gaoliang Tian, 2021. "MD&A readability, auditor characteristics, and audit fees," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5025-5050, December.
    20. Lisa M. Gaynor & Andrea S. Kelton, 2014. "The effects of analyst forecasts and earnings trends on perceptions of management forecast credibility," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(1), pages 189-210, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:aosoci:v:110:y:2023:i:c:s0361368223000417. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/aos .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.