The effect of tone, signature, and visual elements in compliance management systems disclosures on financial analysts’ decisions

Reiner Quick and Sanjar Sayar

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: Numerous corporate scandals, in conjunction with managerial misbehavior, demonstrate both the need for effective compliance management systems (CMS) and the relevance of compliance reporting. Disclosure elements are a major differentiator when reporting on CMS. This study investigates whether the tone, top managers’ signatures, and visual elements affect financial analysts’ perceptions and decisions. We use several theories from cognitive psychology which suggest that positive tone, the presence of signatures, and the combination of textual and visual elements can induce more favorable perceptions of compliance disclosure. In a 2 × 2 × 2 between-subjects experiment with 148 financial analysts from Germany, we manipulate tone (positive vs. negative), top managers’ signatures (present vs. absent), and visual elements (present vs. absent) to measure analyst perceptions of reliability, understandability, and usability, as well as credit risk, purchase, and recommendation decisions. We then sum up these dependent variables to create two new variables, perceptions, and decisions. Our results suggest that negatively toned compliance disclosure positively affects financial analyst perceptions, unless it is combined with a visual, as well as their decisions, unless it is combined with both a signature and a visual element. Additionally, signatures and a visual element have an overall positive effect on analyst perceptions. The study’s results confirm the relevance of disclosure elements in compliance reporting, which should be of interest to preparers, users, auditors, and regulators of compliance disclosure.

Date: 2026-08-25
New Economics Papers: this item is included in nep-acc
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Published in Journal of International Accounting, Auditing and Taxation (2026-08-25)

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https://tuprints.ulb.tu-darmstadt.de/items/495d719d-a230-4d52-8a99-abc266dc1950
https://doi.org/10.1016/j.intaccaudtax.2024.100619
https://doi.org/10.1016/j.intaccaudtax.2024.100619

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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:161917

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