Investors' Information Processing Behavior: Management Disclosures' Fluency and Sentiment

This study investigates the influence of management disclosures' fluency and sentiment on investors' information processing behavior (IPB), and explores how investors' attributes impact their IPB. In this regard, we use A 2 × 2 × 2 between-subjects experimental design to present 201 individual investors with disclosures containing bad news about firm performance. These disclosures varied in terms of fluency and sentiment. Our findings suggest that fluency and sentiment impact investors' IPB. Moreover, expert investors respond differently to variations in fluency and sentiment than non-expert investors, and fluency has a more significant effect on IPB than sentiment. This study offers valuable insights into the impact of fluency and sentiment in management disclosures. Additionally, it underscores the significance of considering investors' characteristics when formulating effective disclosure policies.