The effect of Earnings-Announcement Narrative and Investor Judgment with emphasis on behavioral biases

Subject Areas : Financial Knowledge of Securities Analysis

Hassan Chenari Bouket ¹ ( Ph.D Student, Department of Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran )
Bahman Banimahd ² ( Associate Professor, Department of Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran )
Hamid Ahmadzadeh ³ ( Assistant Professor, Department of Accounting, Karaj Branch, Islamic Azad University, Karaj, Iran )

Received: 2021-01-29 Accepted : 2021-08-01 Published : 2022-02-20

Keywords: Behavioral Biases, Earnings-Announcement Narrative, Investor Judgment,

Abstract :

The purpose of this study is the effect of Earnings-Announcement Narrative and Investor Judgment with emphasis on behavioral biases. This study was performed on 245 investment experts and managers and ordinary investors who were randomly selected in 1399. To analyze the data and test the research hypotheses, the structural equation model was used with the help of Smart PLS software. Findings from the study indicate that the effect of the tone of the Earnings-Announcement on the investor's judgment is significant in cases of neutrality and all-roundness, but in the case of conflict has no significant effect. According to the calculated t-statistics on the effect of behavioral biases on investor judgment, it can be said that in all three cases of neutrality, alignment and conflict are not statistically significant and the second and third hypotheses of the study are not confirmed. According to the above result, it can be acknowledged that the effect of the profit announcement tone through behavioral biases on the investor's judgment is not statistically significant and the fourth and fifth hypotheses of the research are not accepted. Among the control variables, the effect of mathematical literacy on investor judgment is statistically significant. Findings from the test of research hypotheses in accordance with the theory of information duplication processing Epstein (1996) is based on an analytical system that is not affected by emotions and feelings in judgment and decision and logic and reasoning play a major role in judging and decision making.

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