Investigating the Mediating Role of Understanding, Processing Fluency and Credibility of an Earnings Press Release on the Relationship between Language Sentiment, Readability, Sophistication and Investors’ Judgment and Decision-making

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Faghfour Maghrebi Yeganeh; SAJADI SEYED HOSSEIN; ASNAASHARI HAMIDEH; REZAEIAN ALI

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Journal: THE IRANIAN ACCOUNTING AND AUDITING REVIEW Year:2020 | Volume:27 | Issue:1 Page(s): 87-113

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Title

Investigating the Mediating Role of Understanding, Processing Fluency and Credibility of an Earnings Press Release on the Relationship between Language Sentiment, Readability, Sophistication and Investors’ Judgment and Decision-making

Author(s)

Faghfour Maghrebi Yeganeh | SAJADI SEYED HOSSEIN | ASNAASHARI HAMIDEH | REZAEIAN ALI | Issue Writer Certificate

Keywords

The credibility of an earnings press releaseQ1

Language sentimentQ1

Processing fluencyQ1

UnderstandingQ1

ReadabilityQ1

Abstract

Objective: The goal of this study is to investigate the mediating variables affecting investors’ judgments. Methods: We conduct a 2. 2. 2 between-subject experiment with accounting students as participants to test our hypotheses. Independent variables that have been manipulated or measured are Language sentiment (positive vs. neutral), Readability (less vs. more) and investor sophistication level (less vs. more sophisticated investors). The dependent variable is investors’ forecasts of firm future earnings. The mediating variables are Understanding, Processing fluency and credibility of an earnings press release. Results: Path analysis shows that Understanding and Processing fluency mediate the influence of positive Language sentiment and low Readability of an earnings press release on less sophisticated investors’ earnings judgments. Results further show that earnings press release credibility has the same effect on more sophisticated investors’ earnings judgments. Conclusion: The results of this study show that the use of Language sentiment which is compatible with a firm’ s quantitative performance together with increasing the Readability of qualitative disclosures can play an important role in improving Understanding and enhancing the Processing fluency of less sophisticated investors. It can be also a cautionary notice to management and warn them that more sophisticated investors’ perception of disclosure credibility may be impaired by manipulating the Language sentiment and Readability of qualitative disclosures.

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APA: Copy

Faghfour Maghrebi, Yeganeh, SAJADI, SEYED HOSSEIN, ASNAASHARI, HAMIDEH, & REZAEIAN, ALI. (2020). Investigating the Mediating Role of Understanding, Processing Fluency and Credibility of an Earnings Press Release on the Relationship between Language Sentiment, Readability, Sophistication and Investors’ Judgment and Decision-making. THE IRANIAN ACCOUNTING AND AUDITING REVIEW, 27(1 ), 87-113. SID. https://sid.ir/paper/364991/en

Vancouver: Copy

Faghfour Maghrebi Yeganeh, SAJADI SEYED HOSSEIN, ASNAASHARI HAMIDEH, REZAEIAN ALI. Investigating the Mediating Role of Understanding, Processing Fluency and Credibility of an Earnings Press Release on the Relationship between Language Sentiment, Readability, Sophistication and Investors’ Judgment and Decision-making. THE IRANIAN ACCOUNTING AND AUDITING REVIEW[Internet]. 2020;27(1 ):87-113. Available from: https://sid.ir/paper/364991/en

IEEE: Copy

Yeganeh Faghfour Maghrebi, SEYED HOSSEIN SAJADI, HAMIDEH ASNAASHARI, and ALI REZAEIAN, “Investigating the Mediating Role of Understanding, Processing Fluency and Credibility of an Earnings Press Release on the Relationship between Language Sentiment, Readability, Sophistication and Investors’ Judgment and Decision-making,” THE IRANIAN ACCOUNTING AND AUDITING REVIEW, vol. 27, no. 1 , pp. 87–113, 2020, [Online]. Available: https://sid.ir/paper/364991/en

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