The effect of boilerplate language on nonprofessional investors’ judgments

Ozlem Arikan

Accounting and Business Research, 2022, vol. 52, issue 4, 417-442

Abstract: Most companies disclose risk factors using vague, boilerplate language. Regulators are concerned that this vagueness reduces the decision-usefulness of the information; hence, they are encouraging companies to be more specific rather than generic. However, little is known about the impact of specificity on investment judgments. The results of this experimental study suggest that regulators’ concern may be justified. Non-professional investors who read a generic disclosure react less strongly immediately after reading it than those who read a more specific disclosure when prior information about the disclosed risk factor is available in their memory immediately before reading the risk disclosure. In addition, on realisation of the risk, they are more surprised than their counterparts who read a more specific disclosure, and lower their credibility judgments accordingly. These investors correct their judgments after the risk realisation to a greater extent than those who have read a more specific disclosure. The study has implications for regulators, managers, non-professional investors and researchers.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/00014788.2021.1922990 (text/html)
Access to full text is restricted to subscribers.

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:taf:acctbr:v:52:y:2022:i:4:p:417-442

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RABR20

DOI: 10.1080/00014788.2021.1922990

Access Statistics for this article

Accounting and Business Research is currently edited by Vivien Beattie

More articles in Accounting and Business Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().