The impact of information presentation order on the judgments of non-professional investors

The objective of financial reporting is to provide decision-useful information to a wide-range of existing and potential stakeholders. However, the under regulation of qualitative financial information, such as management commentary and design elements, such as the use of graphical images, may enable management to opportunistically engage in impression management through strategic disclosure and presentation. The aim of this study is to examine the impact of information presentation order on the judgments of investors. Specifically, it focuses on the strategic presentational ordering of graphical and textual disclosures and how it may prompt order effects in investor judgments of corporate performance. The study utilizes an eye-tracking device to provide in-depth insight into the perceptive and cognitive processes of individuals used to assess financial information and form judgments. The main benefit of this study is to provide a better understanding of how impression management may distort the judgments of investors and how this is likely to impact investors’ portfolios. Ultimately, the findings may help to enhance decision-usefulness of financial information and judgments made by investors.