Financial Reporting Complexity, Investor Sentiment, and Stock Prices

Min-Hsi Chung and Ya-Kai Chang

Finance Research Letters, 2024, vol. 62, issue PA

Abstract: This study investigates whether financial reporting complexity affects the sensitivity of stock prices to general investor sentiment of difficult-to-value firms. Our findings indicate that investor sentiment has a larger effect on difficult-to-value firms with high financial reporting complexity than on those with low financial reporting complexity. These findings suggest that policymakers should consider that increased financial reporting complexity may aggravate investor sentiment's effect on the stock prices of difficult-to-value firms when valuations become more difficult. By doing so, we contribute to the existing literature by presenting additional evidence on the relationship between financial reporting complexity and sentiment-driven mispricing.

Keywords: Financial reporting complexity; Investor sentiment; Stock prices (search for similar items in EconPapers)
JEL-codes: G14 G18 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324000564
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324000564

DOI: 10.1016/j.frl.2024.105026

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().