Inexperienced retail investors can be influenced by very simple presentation choices in earnings announcements.
Sunday, March 14, 2021 - 18:30
This article, published in RTE Brainstorm, on Thursday 11th March 2021, outlines how inexperienced investors can be taken in by hype in earnings announcements. Using eye-tracking technology, this research shows how inexperienced and experienced retail investors search for and view corporate information differently, which in turn impacts their investment decisions. Inexperienced investors try to simplify the situation using mental shortcuts when overwhelmed with too much information and too little time. As such, they can be influenced by very simple presentation choices in earnings announcements.